Finance Minister Jim Flaherty continues to push Ontario Premier Dalton McGuinty to cut business taxes to help the province's sagging economy, despite suggestions by some economists that Ottawa provide the province with targeted assistance programs.
McGuinty has started to move to lower taxes on businesses, but he hasn't gone far enough, Flaherty told CTV's Question Period.
"Most of the provinces are on side. The province of Ontario is not yet on side. They are on the capital taxes. They are not yet on side on the business taxes. So, I'm gently encouraging Premier McGuinty in that direction," he said.
The softer approach is a contrast to what has often been a war of words between Flaherty and McGuinty over how to help Ontario's ailing economy.
Flaherty and McGuinty have squabbled over who is to blame for the nearly 200,000 lost manufacturing jobs in the province, many in the auto sector. The differences:
- Ottawa favours broad-based tax cuts for all businesses
- Ontario and Quebec have directly intervened in troubled sectors with grants to encourage companies to locate in their jurisdictions.
The Ottawa-Ontario dispute appeared to become more than a philosophical disagreement this winter after Flaherty said McGuinty's refusal to lower corporate taxes was discouraging business investment, going so far as to hold a news conference to urge tax changes on the eve of the Ontario budget.
Some analysts have suggested Ontario needs targeted assistance for infrastructure projects and employment insurance programs to help those who are laid off. Some economists have said tax cuts across the board will not alone help Ontario.
Despite recent polls suggesting Ontario residents are not confident about the federal government's ability to handle an economic slowdown, Flaherty said he hasn't abandoned his government's tax-cut strategy.
"The more we can reduce the burden on business, the better ... I think we're going in the right direction," he said.
