Ontario cannot afford to reduce corporate taxes in next week's provincial budget without closing hospitals and schools, Premier Dalton McGuinty said on Wednesday.
McGuinty was reacting to a suggestion from federal Finance Minister Jim Flaherty that Ontario should cut its business taxes to strengthen the province's economy.
"Seventy-five per cent of all the money we spend around here goes to health and education and supports for the vulnerable, so you can't take $5.1 billion out and not close hospitals, and not fire nurses, and not make cuts to education, and not give rise to dramatic increases in tuition, and not fire water inspectors and not make cuts to social assistance," McGuinty told reporters.
"It just can't be done. There's just not enough money in the other 25 per cent to fully give effect to that $5.1 billion tax cut. It's not there. I'm not prepared to do that."
McGuinty and Flaherty have been in a public war of words for weeks. Flaherty claims Ontario is on track to become a have-not province within two or three years.
Premier said there was no way Ontario would become a province in need of equalization payments, and noted even the most pessimistic economists still forecast growth this year and next. He also dismissed Flaherty's assertion that Ontario's economic policies were putting a strain on the national economy, and told the federal minister not to panic.
Instead of squabbling, McGuinty says residents would prefer to see Flaherty sit down with his Ontario Finance Minister Dwight Duncan and start working together despite the opposing economic policies.
Duncan says he hasn't spoken to Flaherty since the federal minister "decided to attack Ontario businesses and families.''
The premier says Prime Minister Stephen Harper has not responded to his letter complaining about Flaherty's earlier comments that Ontario was the last place where a new business would want to invest.
McGuinty wouldn't say whether there would be any new tax cuts in Tuesday's budget, but said there would be more help for the province's struggling manufacturing sector and money to retrain for those who have lost good-paying jobs.
With a report from CTV Toronto's Paul Bliss and files from The Canadian Press
