Tax System in Ontario

The issue is whether Ontario should have a different tax system than the
federal government of Canada.The provinces already have different ways of
calculating taxes from the federal government and from one another.
Verburg (1998) noted five years ago that the taxpayers in Ontario and
Alberta were benefiting form an effort by each to have the lowest taxes in
Canada.Still, Verburg also noted that the tax cuts to that time were not
very substantial even as each province was trying to become the most
attractive province in which to do business for the North American economy.
Alberta long had the lowest personal income-tax rate in Canada, but the
Ontario government set out undercut Alberta by half a percentage point by
lowering its basic personal income-tax rate to 45% of the basic federal
tax.Alberta answered this soon after by cutting its basic rate to 44%, at
which time Ontario countered with 40.5%.Verburg cheered them on, stating
that “the two provinces are chipping away at Canada’s burdensome tax
Verburg further noted that Ottawa was not responding with the same
On a recent swing through Alberta, federal Finance Minister Paul
Martin said giving Canadians a break on their income tax is “a major
priority” for the 1999 federal budget, when a multibillion-dollar
budget surplus is expected.But, so far, there has been no firm
commitment to return those extra dollars to the people who earned them
The Ontario income tax system changed how it calculates the tax
beginning in 2002 so that it now levies its personal income tax as a
parentage of taxable income rather than as a percentage of basic federal
tax.This system is known as tax-on-income (TONI) system, and it is used
to allow Ontario to set its own tax brackets and tax rates independently of
the federal system, and so provides the Province with direct control over
many features of the …