As speculation of an early election mounts, Ontario Premier Doug Ford will be rolling out a $200 handout to all Ontarians in an effort to alleviate cost of living concerns. However, economists have questioned the effectiveness of the planned handouts.
After weeks of speculation, the Ford government announced that as part of Ontario’s fall economic statement, the government would be rolling out $200 dollars to each Ontarian and an additional $200 to families with a child eligible for the Canada Child Rebate.
The plan is estimated to cost taxpayers $3 billion and is expected to be delivered in early 2025 to an estimated 12.5 million adults and 2.5 million children.
Premier Ford says that the government is handing out $200 to Ontarians in an effort to alleviate cost of living concerns and the financial pain borne by the Trudeau government’s carbon tax.
“We’re doing everything we can to keep costs down for Ontario families, but the federal carbon tax and high interest rates are still hurting taxpayers across the province,” said Ford in a press release.
“This $200 taxpayer rebate will give Ontario taxpayers, especially families with children, some much-deserved help so they can make ends meet.”
Despite Ford and his government touting the policy as a means to alleviate affordability concerns, economists are questioning how much the planned handouts will help Ontario residents.
In a comment to True North, economist Trevor Tombe said that while the handouts may be too small to fuel inflation in the province, the financial aid may not have as big of an impact as the PC government claims.
“If the aim is to boost household disposable income, then tax reductions would be preferable—since they would also encouraging work and investment incentives,” said Tombe.
“Sending out $200 cheques is a one-time boost, but doesn’t provide lasting incentives for economic growth, investment, employment, and so on.”
Tombe also warned that financing such a spending program by taking out debt can only mean higher costs down the line for taxpayers.
“There’s also the issue of debt. Borrowing to fund this policy means higher interest costs in the future, which could lead to higher taxes or reduced spending down the line to compensate,” said Tombe.
Before the fall economic statement, the Ontario government was projected to run a $647.0 million deficit in fiscal year 2023/24, down $666.0 million from initial projections. However, the $200 handouts will surely add to the province’s net debt which stands at $408.0 billion.
In fiscal year 2023/24, the Ontario government is expected to spend $14.1 billion on paying off debt interest.
In a comment to True North, laissez-faire economist Matthew Lau shared a column he had written in which he suggested that the Ontario government is quietly taking major sums from Ontarians in the form of taxes while loudly redistributing small sums of said tax dollars.
“Sending $200 cheques to every Ontarian might — as Thomas Sowell suggested — be a successful way for the Ford government to increase public support ahead of a potential provincial election,” said Lau.
“But the economic evidence suggests, assuming personal and business income tax revenues are used to fund these rebates, that for every $1 spent on this scheme will cost taxpayers more than $3 — a horrendous deal.”
Premier Ford has indicated that he will not be calling for a new election by the year’s end, but suggested that he might pull the trigger on calling for one in 2025.
True North reached out to Premier Ford’s office for comment, but no response was received.
