Ontario Cuts Budget Deficit

Canada's most populous province, and the world’s biggest sub-sovereign debtor, kept its focus on spending restraint in a budget update on Wednesday that included a small business tax break and cut the deficit forecast for the current fiscal year.

Ontario, which accounts for nearly 40% of Canada’s gross domestic product and is a major exporter of manufactured products, including autos, faces economic headwinds from global trade frictions and high household debt.

The ruling Progressive Conservative Party of Premier Doug Ford, which won a majority government in last year’s election, has faced a backlash after it cut spending on some public services in its first budget in April, aiming to balance the books over the coming years.

After higher than anticipated revenues in the current fiscal year, the Conservatives eased some spending restraint but maintained their target to eliminate the deficit in 2023-24.

Compared to April’s budget, spending on programs such as health-care, education and childcare and social services was boosted by $1.3 billion in the 2019-20 fiscal year, which ends on March 31.

Ontario's revenue, including Toronto and Ottawa, was seen $1.6 billion higher at $155.8 billion.

The deficit projection was cut to $9.0 billion, which includes a $1-billion reserve, from $10.3 billion estimated in April, while lower deficits were projected in future years. The deficit was $7.4 billion in 2018-19.

The Tories said they would reduce the small business corporate income tax rate to 3.2% from 3.5%, beginning on Jan. 1, 2020.

The 2019 economic growth forecast was left unchanged at 1.4%, compared with 2.3% growth in 2018.