Ontario’s Premier Doug Ford has announced that his government will be providing $200 cheques of tax-free money to Ontarians in early 2025, in advance of what is expected to be an early election call.
The payout will amount to an estimated $3 billion which will have to be borrowed as Ontario is currently running a $6.6 billion deficit for the 2024-2025 fiscal year (although this is slightly down from the $9.8 billion deficit projected in the spring budget). This means that the payout will amount to almost half of the Province’s current deficit and is expected to add in between $100M to $150M to Ontario’s annual interest costs in perpetuity.
To be eligible for the payout, a recipient must be:
• 18 years of age or older at the end of 2023
• A resident of Ontario on December 31, 2023
• Have filed their 2023 Income Tax and Benefit Return by December 31, 2024
• And not be bankrupt or incarcerated in 2024
Families who qualify for a Canada Child Benefit (CCB) payment for 2024 would receive an additional $200 for each eligible child under age18, with the payment being made to the person(s) who receive the CCB. The child must be a resident of Ontario. For families not receiving the CCB, the opportunity for an alternative process will be provided. Some 12.5 million adults and 2.5 million children are expected to qualify, with a family of 4 receiving $800.
Premier Ford said that “federal carbon tax and high interest rates are still hurting taxpayers across the province” and that this “will help keep costs down for Ontario families”. According to the Government of Canada website, the Canadian Carbon Rebate (CCR) will payout to a family of four in Ontario (2 adults + 2 children) a total of $1,120 between April 2024 and January 2025 by way of four quarterly payments. A further 10-20% will be added for various rural residents. Federal Opposition Leader Pierre Poilievre has promised to eliminate the “carbon tax” if elected which would also eliminate this rebate.
Two other provincial governments have made such similar payouts in past years. The first was also in Ontario when in 2000 Premier Mike Harris provided a $200 “tax rebate” after his government ran a surplus budget which covered the cost. The other was that of Premier Ralph Kline in Alberta who in January 2006 paid out a $400 “prosperity bonus” to each Albertan based on a budget surplus of $6.8B due to rising oil and gas prices. Neither government had to borrow the money to provide the payouts. Although recipients spent their windfall in different ways, retailers in both provinces experienced increased sales in consumer products following the payouts.
The question for vendors and retailers in Ontario, including in our sector, is – will this result in an unexpected boost in sales either in the holiday season (in anticipation of consumers receiving the money in the new year), or when it is sent out early in 2025? Or if at all? A $3B infusion of borrowed cash is nothing to sneeze at, but it will have to be serviced as part of the provincial debt for years to come.
