Eves Hints At Retroactive Tax Cuts

In the meantime, the province faces sale of electricity assets to balance the budget for the current fiscal year, he said.

"I don't know what the picture is going to be like come next March. But it has been known to happen in the course of this government that tax reductions are brought in in a budget [that] may actually be retroactive."

In 1999, former premier Mike Harris called a spring election shortly after revealing a schedule for a 20-per-cent cut in personal taxes.

In 1995, the government's core campaign promise was a 30-per-cent tax cut.

Mr. Eves's plans were criticized by the opposition parties, who warned that 49 per cent of Hydro One, the province's massive electricity distribution system, will be unloaded at fire-sale prices to make up for the revenues lost through the past tax cuts.

But announcing tax cuts in a March budget that would be retroactive to Jan. 1 would return the government back to its successful political strategy.

"I personally suspect we are looking at a spring election," Liberal finance critic Gerry Phillips said. "This has a familiar theme to it."

Liberal House Leader Dwight Duncan agreed. "I suspect we'll have a budget in the spring followed by an election."

The government abandoned its focus on successive tax cuts in the June 17 budget when it announced that reductions in personal and corporate taxes and the implementation of tax credits for private schools would be delayed for a year. In June Mr. Eves and Finance Minister Janet Ecker suggested that the tax cuts could be implemented in her fall economic and fiscal review.

But Ms. Ecker did not cut any taxes when she delivered the review yesterday. Instead she promised that the previously planned tax cuts would be contained in her budget scheduled for March.

Further, she promised there would be new schedules for additional tax cuts beyond those announced in past budgets.

But critics complained that cutting taxes and losing revenues are forcing the government to dispose of its assets at fire-sale prices.

Up for sale now is 49 per cent of Hydro One, in the wake of Mr. Eves's decision last June to keep a majority interest in the corporation in the government's hands.

"We're not going to sell it in a fire sale, but I am told by officials at Superbuild who are talking to these people . . . that the value of the asset has not been affected by recent events, contrary to popular belief," he said.

Experts in the electricity industry say the uncertainty caused by Ontario's reversal of its plans to deregulate the industry, and the Nov. 11 announcement of a freeze on energy prices, have driven many would-be investors in parts of the former Ontario Hydro from the market.

Mr. Phillips was among those challenging Ms. Ecker's assurances that the government is on target to balance the budget for the current fiscal year.

The budget calls for $2.4-billion in revenues from sales and rentals to avoid running a deficit.

The government also has put electricity-generating stations owned by Ontario Power Generation on the block, but sales have been slow in coming.

Mr. Phillips argued that the need for the fire sale of assets shows the government has been "incompetent" in managing the province's finances over the past 7½ years.

New Democratic Party Leader Howard Hampton disputed Ms. Ecker's glowing review of the government's fiscal accomplishments. "She left out the fact that Ontario's unemployment rate is increasing."