One of the major pre-election goodies the Ford Government has recently rolled out is free auto licence plate renewals, which will save drivers in southern Ontario an annual fee of $120 (and drivers in northern Ontario $60) and cost the Treasury approximately $1 billion. There is more than meets the eye here.
How it Works
First, if you renewed our licence during the last two years, you will soon receive a cheque in the mail. But it gets better. You can renew your licence plate for the next year or two for free. If you can have two years for free, why would you settle for one? So this isn’t a one-year giveaway, but a permanent change. If the Ford Government is defeated and its successor attempts to reinstate the licence plate fee, there will undoubtedly be drivers taking the new government to court, arguing that the free renewal for two years represents a contract that cannot be altered by one party.
The Ford Government is creating a $1 billion hole in its budget. To get a sense of scale, here are the 2021-22 budgets of some ministries of comparable or smaller size:
- Environment, Conservation and Parks, $687 million
- Agriculture, Food, and Rural Affairs, $754 million
- Economic Development, Job Creation, and Trade, $885
- Heritage, Sport, Tourism, and Cultural Industries (base budget excluding cultural media tax credits), $1.02 billion, and
- Natural Resources and Forestry, $673 million.
We can think of the Ford Government as either traditionally conservative, its stance when it took power, or populist, which is what it seems to have become. A traditional conservative would have to finance this giveaway with budget cuts to programs in these ministries and in others. Or, after the election, it would have to raise taxes or increase fees by $1 billion. The former would be painful for recipients of programs and the latter would make obvious the Ford Government’s cynicism in giving out a goodie just before an election and taking it back after.
A populist government is not likely to care about the hole in the budget. When the cut was announced, Doug Ford’s office put the following words in his mouth, “As the cost of living continues to go up, our government is cutting costs for families to make life more affordable. Eliminating the fee to renew your licence plate and refunding the cost of doing so for the past two years is a concrete way we can put and keep more money in the pockets of hard-working Ontarians.” The obvious question that comes to mind, is why stop at licence plate fees? Why not put more money in the pockets of hard-working Ontarians by cutting taxes? In this view, there is no need to worry about the growing deficit. Interest rates are low. Future generations will fill the hole.
An Ontario Precedent
Just before the Ontario election of June 3, 1999, the Harris Government sent a rebate cheque of $200 to every taxpayer. This money, however, came out of a budget that had a small surplus that occurred because the economy was growing more rapidly than forecast and because the privatization of Highway 407 – a deal that closed on May 5, the same day the election was called – contributed $1.6 billion. Harris’s giveaway came out of money the Government had, rather than from money it would have to borrow.
Fighting Fire with Fire
If you are appalled by the Ford Government’s cynicism, you might want to do something about it. If Ford is giving you dollars to retain power, you can use those same dollars to defeat him. Fight fire with fire.
Ontario provides a political contribution tax credit for 2022 of 75 percent of the first $437 you give and 50 percent on the next $1020. Finally, you get a 33.33 percent tax credit on the final $1858 (which takes you up to a maximum allowable contribution of $3315). If you haven’t made any other political donations in 2022, a donation of $459 would have a net (after the tax credit) cost to you of $120 ((.25 x $ 437) + (.5 x $22)). If you’ve already made political donations, you get less bang for your buck, but the impact is still substantial.
To whom and how much you donate will depend on what you’ve already given and your view about which candidate running in your constituency is most likely to defeat Ford’s candidate. But Doug Ford won’t have bought your vote.