Chapter 3: Ontario’s Fiscal Plan and Outlook

Introduction

The government remains on track to achieve fiscal balance by 2026–27 while making targeted investments to support families, keep costs down and rebuild the economy. The 2024 Ontario Economic Outlook and Fiscal Review is projecting a deficit of $6.6 billion in 2024–25. Over the medium term, the government projects a deficit of $1.5 billion in 2025–26 followed by a surplus of $0.9 billion in 2026–27. This is a significant improvement compared to the 2024 Budget and reflects the government’s commitment to balancing the budget, reducing the deficit and putting Ontario’s finances on a sustainable path.

The recently released Public Accounts of Ontario 2023–2024 demonstrates Ontario’s fiscally responsible approach with a recorded deficit of $0.6 billion in 2023–24. This demonstrates that the province’s fiscal approach can keep taxes low, make the necessary investments for a growing population and improve the province’s financial position.

The net debt-to-GDP ratio is projected to be 37.8 per cent in 2024–25. Ontario’s net debt-to-GDP ratio fell to a 12-year low last year, and Ontario’s plan keeps this ratio below levels seen since 2011–12.

Key Changes in 2024–25 Since the 2024 Budget

Ontario’s 2024–25 deficit is projected to be $6.6 billion — an improvement of $3.2 billion from the outlook published in the 2024 Budget. This reflects updated economic and revenue information and higher contingencies to mitigate near-term risks.

Revenues in 2024–25 are projected to be $212.6 billion, $6.9 billion higher than forecast in the 2024 Budget. This increase is largely driven by higher-than-expected taxation revenue. This forecast is based on information available as of September 30, 2024.

Program expense in 2024–25 is projected to be $205.5 billion, $5.0 billion higher than the forecast in the 2024 Budget. This is primarily due to a one-time taxpayer rebate to individuals and families, and a top-up of the Contingency Fund to provide flexibility to protect important public services and quickly address unforeseen expense events that could materialize in the second half of the fiscal year.

Ontario is forecast to pay $12.7 billion in interest costs in 2024–25, about $1.2 billion lower than the forecast in the 2024 Budget.

The net debt-to-GDP ratio is now projected to be 37.8 per cent in 2024–25, 1.4 percentage points lower than the 39.2 per cent forecast in the 2024 Budget. The net debt-to-GDP ratio decreased mainly due to lower than previously projected deficits.

The 2024–25 outlook also maintains a $1.0 billion reserve, unchanged from the 2024 Budget, to protect the fiscal plan against unforeseen adverse changes in Ontario’s revenue and expense forecasts for the remainder of the fiscal year. This is part of the government’s flexible fiscal plan to respond to uncertainty and risks.

Revenue Update

The 2024–25 total revenue outlook is $212.6 billion, $6.9 billion higher than projected in the 2024 Budget and the 2024–25 First Quarter Finances. The increase in the revenue forecast since the 2024–25 First Quarter Finances is mainly due to a stronger economic outlook in 2024 and higher taxation revenue from the projected impact of the federal government’s Budget 2024 announcement of the proposed changes to the capital gains inclusion rate.¹ Taxation revenue has been partially offset by the proposed six‐month extension of the reduction to the Gasoline Tax by 5.7 cents per litre and Fuel Tax by 5.3 cents per litre.

Key changes in the revenue outlook compared with the 2024 Budget and 2024–25 First Quarter Finances forecast include:

• Personal Income Tax revenue projections increased by $2,829 million, mainly due to higher‐than‐expected revenues from the processing of 2023 and prior years’ tax returns and stronger growth in compensation of employees in 2024. Personal Income Tax revenue is also higher due to the impact of the federal government’s proposed changes to the capital gains inclusion rate.
• Corporations Tax revenue projections increased by $2,963 million, mainly due to higher-than-expected corporate profitability in the first half of 2024. Corporations Tax revenue is also higher due to the impact of the federal government’s proposed changes to the capital gains inclusion rate.
• Sales Tax revenue projections increased by $1,130 million, mainly due to the expectation of higher official federal Harmonized Sales Tax (HST) entitlements for 2023 as indicated by actual Canada Revenue Agency (CRA) collections to date.
• Employer Health Tax projection increased by $314 million, mainly reflecting stronger growth in compensation of employees in 2024.
• Ontario Health Premium projection increased by $120 million, mainly due to higher‐than‐expected revenues from the processing of 2023 and prior years’ tax returns and stronger growth in compensation of employees in 2024.
• Land Transfer Tax revenue projections are lower by $261 million, mainly reflecting slower-than-expected housing market activity in 2024.
• Gasoline Tax and Fuel Tax projections combined decreased by $309 million, mostly due to the proposed six‐month extension of the reduction to the Gasoline Tax by 5.7 cents per litre and Fuel Tax by 5.3 cents per litre. See the Annex: Details of Tax Measures and Other Legislative Initiatives for further information.
• Projections for All Other Taxes combined increased by $187 million, which is mainly due to the new vaping duty from the Coordinated Vaping Products Taxation Agreement with the federal government and higher Electricity Payments-in-Lieu of Taxes that were partly offset by lower Beer, Wine and Spirits Taxes.
• Government of Canada Transfers projections increased by $60 million, reflecting higher projected federal funding under the Canada Health Transfer and Canada Social Transfer programs due to Ontario’s increasing share of the national population.
• Net Income from Government Business Enterprises projections decreased by $92 million. This reflects several factors, including net income from the Ontario Lottery and Gaming Corporation, which is projected to be lower, primarily driven by economic impacts on consumer discretionary spending. Additionally, the Liquor Control Board of Ontario (LCBO) net income is projected to decline due to the impact of the strike in July, lower sales projections due to lower alcohol consumption and the transitory impact of the alcohol marketplace modernization. These declines are partly offset by higher projected net income from Ontario Power Generation, largely due to projected Ontario Nuclear Funds’ realized gains.
• Other Non‐Tax Revenues projections combined are higher by $2 million, mainly due to higher Power Supply contract recoveries reflecting higher than forecast electricity generation and rates.

Expense Update

Since the release of the 2024 Budget and 2024–25 First Quarter Finances, changes to program expense primarily relate to a one-time taxpayer rebate to individuals and families, additional funding for health services and a top-up to the Contingency Fund. The 2024–25 total expense outlook is projected to be $218.3 billion, $3.8 billion higher than both the 2024 Budget and the 2024–25 First Quarter Finances. This increase is below the $6.9 billion improvement in revenue projections since the 2024 Budget, which reflects the government’s priority to reduce the deficit.

Key investments since the 2024–25 First Quarter Finances include:

• $3.0 billion for a proposed one-time $200 taxpayer rebate to each eligible adult Ontario tax filer and each eligible child under the age of 18;
• $1.0 billion to address pressures related to compensation and growing demands in the health sector;
• $606.8 million for Ontario Public Service compensation costs, including those related to collective agreement outcomes;
• $86.5 million as part of the audited up to $225 million in payments to The Beer Store for the reimbursement of costs towards supporting a stable transition to a more open and convenient alcohol beverage marketplace;
• $7.7 million to support the Frankfort Family Reena Residence in constructing new space for employment services, sports programs, meeting rooms and wellness programs, serving people with developmental disabilities and other people in the community; and
• An increase of $93.4 million, primarily due to industrial supports, infrastructure and other technical changes.

Additionally, the Contingency Fund has been increased by an additional $900 million to support greater flexibility in the fiscal plan to help protect against unforeseen changes and mitigate expense risks.

Interest on Debt expense is projected to be $12.7 billion, about $1.2 billion lower than the forecast in the 2024 Budget and the 2024–25 First Quarter Finances.

Prudence in 2024–25

The Ontario government continues to maintain a responsible and flexible fiscal plan to respond to uncertainty and risks. The Fiscal Sustainability, Transparency and Accountability Act, 2019 requires Ontario’s fiscal plan to incorporate prudence in the form of a reserve to protect the fiscal outlook against unforeseen adverse changes in the province’s revenue and expense, including those resulting from changes in Ontario’s economic performance. As a result of higher-than-anticipated revenue levels, the government has chosen to allocate a portion of revenue to contingencies.

The 2024 Budget included a reserve of $1.0 billion in 2024–25, which has been maintained as part of the current fiscal outlook. In addition, the Contingency Fund is maintained to help mitigate expense risks. For 2024–25, after a $0.9 billion top-up in the 2024 Ontario Economic Outlook and Fiscal Review, the Contingency Fund has a projected balance of $1.7 billion.

Medium-Term Fiscal Plan

The government is projecting deficits of $6.6 billion in 2024–25 and $1.5 billion in 2025–26, followed by a surplus of $0.9 billion in 2026–27. This reflects a significant improvement compared to the 2024 Budget and reflects the government’s commitment to balancing the budget, reducing the deficit and putting Ontario’s finances on a sustainable path.

Medium-Term Revenue Outlook

Over the medium term, revenue is forecast to increase from $212.6 billion in 2024–25 to $230.7 billion in 2026–27.

The taxation revenue outlook reflects the impact of finalized 2023–24 results and updated economic growth outlook since the 2024 Budget. See Chapter 2: Economic Performance and Outlook for more details.

The primary driver of the forecast for Personal Income Tax revenue is the outlook for growth in the compensation of employees. Personal Income Tax includes an estimated $0.9 billion over the 2024–25 to 2026–27 period from the potential impact of the federal government’s proposed changes to the capital gains inclusion rate. Personal Income Tax revenue is projected to grow at an average annual rate of 6.2 per cent between 2023–24 and 2026–27.

The Sales Tax revenue projection is based primarily on the outlook for household consumption spending. Sales Tax revenue is projected to grow at an average annual rate of 2.8 per cent between 2023–24 and 2026–27.

The forecast for Corporations Tax revenue is mainly driven by the outlook for growth in the net operating surplus of corporations. Corporations Tax revenue includes an estimated $2.4 billion over the 2024–25 to 2026–27 period from the potential impact of the federal government’s proposed changes to the capital gains inclusion rate. Corporations Tax revenue is projected to grow at an average annual rate of 7.5 per cent between 2023–24 and 2026–27.

The Ontario Health Premium revenue forecast is based primarily on the outlook for growth in the compensation of employees. Ontario Health Premium revenue is projected to increase at an average annual rate of 3.6 per cent between 2023–24 and 2026–27.

Education Property Tax revenue is based primarily on the outlook for growth in the property assessment base resulting from new construction activities. Revenues are projected to increase at an average annual rate of 0.4 per cent between 2023–24 and 2026–27.

Revenues from All Other Taxes are projected to increase at an average annual rate of 7.0 per cent between 2023–24 and 2026–27. This includes revenues from the Employer Health Tax; Land Transfer Tax; Beer, Wine and Spirits Taxes; and volume-based taxes such as the Gasoline Tax, Fuel Tax and Tobacco Tax.

The forecast for Government of Canada Transfers is based on existing federal–provincial funding agreements and formulas. Federal transfers are projected to increase at an average annual rate of 4.1 per cent from 2023–24 to 2026–27.

The outlook for Income from Government Business Enterprises (GBEs) is based on Ontario Ministry of Finance estimates for Hydro One Ltd. (Hydro One) and projections provided by Ontario Power Generation (OPG), the Ontario Cannabis Store (OCS), the Liquor Control Board of Ontario (LCBO), the Ontario Lottery and Gaming Corporation (OLG) and iGaming Ontario (iGO). Net incomes of GBEs are projected to increase at an average annual rate of 0.2 per cent from 2023–24 to 2026–27.  

The forecast for Other Non-Tax Revenue is based on projections provided by government ministries and provincial agencies. The outlook for Other Non-Tax Revenue is projected to decrease at an average annual rate of 5.4 per cent from 2023–24 to 2026–27.

Economic and Fiscal Outlook Scenarios

To illustrate the potential impacts of elevated economic uncertainty, the Ontario Ministry of Finance has developed two plausible alternative scenarios that the economy could take over the next several years. See Chapter 2: Economic Performance and Outlook for more details.

Based on the two alternative nominal GDP economic scenarios, two taxation revenue scenarios were developed. The Faster Growth and Slower Growth scenarios each represent a potential path intended to illustrate a broader range of possible outcomes but should not be considered as the best case or the worst case.

In the Faster Growth scenario, total taxation revenue is $9.9 billion higher in 2026–27 than the Planning Projection, while in the Slower Growth scenario, total taxation revenue is $8.6 billion lower.

In the event that the alternative economic scenarios materialize, as opposed to the Planning Projection, Ontario’s fiscal plan would also change as a result.

Under the Faster Growth scenario, the fiscal outlook may improve to a deficit of $4.2 billion in 2024–25 and reach surpluses of $6.2 billion in 2025–26 and $11.4 billion in 2026–27. However, if the Slower Growth scenario takes place instead, the fiscal outlook may deteriorate to deficits of $8.8 billion in 2024–25, $8.4 billion in 2025–26 and $8.3 billion in 2026–27.

In these alternative outlook scenarios, program expenses are assumed to be unchanged compared to the medium‐term expense outlook, and only revenue and interest on debt are adjusted.

Medium-Term Expense Outlook

The total expense outlook is projected to grow from $218.3 billion in 2024–25 to $227.8 billion in 2026–27 as the government is continuing to make key investments in health care, education, infrastructure and economic development as part of its plan to build a stronger Ontario and respond to an increased demand on services and infrastructure due to a growing population.

Program expense is projected to increase every year, growing at an average annual rate of 3.0 per cent between 2023–24 and 2026–27.

Highlights of changes to the program expense outlook over the medium term include the following:

• Health Sector expense is projected to increase from $86.0 billion in 2024–25 to $90.0 billion in 2026–27. The growth is primarily due to investments in:
  • Addressing the increasing demand for health services, including funding for hospitals and cancer treatment services to respond to Ontario’s growing and aging population;
  • Enhancing mental health and addictions services through the Roadmap to Wellness: A Plan to Build Ontario’s Mental Health and Addictions System;
  • Improving and transforming the home and community care sector to allow more people to stay at home longer;
  • Supporting health human resources initiatives to optimize the existing workforce and recruit and retain health care providers;
  • Improving quality of care in the long-term care sector; and
  • Supporting commitments consistent with arbitration awards and labour agreements.
• Education Sector expense is projected to increase from $37.6 billion in 2024–25 to $39.5 billion in 2026–27. Key investments include:
  • The continued implementation of the Canada-wide Early Learning and Child Care Agreement, which reduces average out-of-pocket child care fees for parents across the province;
  • Investments to prepare students for the jobs of tomorrow, including through the back-to-basics learning strategy, which emphasizes reading, writing and science, technology, engineering and mathematics (STEM) education, as well as launching career coaching for students in Grades 9 and 10; and
  • Funding to address growing enrolment across the province and commitments consistent with labour agreements reached.
• Postsecondary Education Sector expense is projected to increase from $12.2 billion in 2024–25 to $13.1 billion in 2026–27. This is mainly due to:
  • Increased supports to institutions to strengthen postsecondary education in Ontario by implementing a Postsecondary Education Sustainability Fund to help address immediate financial sustainability challenges; and
  • Investments in Health Human Resources initiatives, including the expansion of nursing and medical school seats and the Ontario Learn and Stay Grant, to train and retain more health care workers.
• Children, Community and Social Services Sector expense is projected to increase from $20.0 billion in 2024–25 to $20.1 billion in 2026–27. This growth is primarily due to investments that:
  • Address increasing operational costs for community organizations that support vulnerable populations, including children in care and those with special needs, people with developmental disabilities, and people who have experienced gender‐based violence and human trafficking; and
  • Increase the monthly core allowances for the Ontario Disability Support Program and the maximum monthly amount for the Assistance for Children with Severe Disabilities program.
• Justice Sector expense is projected to decrease from $6.2 billion in 2024–25 to $5.7 billion in 2026–27. Investments in the sector include: 
  • Time-limited funding for modernization initiatives, including the Public Safety Radio Network and the Next Generation 9-1-1 system;
  • Funding to repair, renovate or replace policing facilities in First Nation and Inuit communities through the First Nations and Inuit Policing Facilities Program;
  • Continuing investments in the Justice sector to protect public safety, such as the Guns, Gangs and Violence Reduction Strategy, air support equipment, initiatives to fight auto theft, and the expansion of the Basic Constable Training Program, including the elimination of its tuition fees; and
  • Compensation costs in 2024–25, including costs resulting from collective agreement outcomes.
• Other Programs expense is projected to increase from $43.6 billion in 2024–25 to $45.0 billion in 2026–27. Examples of changes over this period include:
  • Funding to support the government’s multi-year commitment to provide access to high-speed internet for every community across Ontario by the end of 2025;  
  • A proposed one-time taxpayer rebate to each eligible adult Ontario tax filer and each eligible child under the age of 18; and
  • Investments to support housing-enabling infrastructure through the Housing-Enabling Water Systems Fund and Municipal Housing Infrastructure Program. This funding complements investments under the Building Faster Fund.

The total expense outlook includes Interest on Debt expense, which is projected to be $12.7 billion in 2024–25, $14.0 billion in 2025–26 and $14.5 billion in 2026–27.

Prudence Built Into the Medium-Term Outlook

In keeping with sound fiscal practices and the government’s commitment to balancing the budget, Ontario’s revenue outlook is based on prudent economic planning projections, as discussed in Chapter 2: Economic Performance and Outlook.

The government maintains a responsible and flexible fiscal plan to respond to uncertainty and risks. Ontario incorporates prudence in the form of a reserve to protect the fiscal outlook against unforeseen adverse changes in the province’s revenue and expense, including those resulting from changes in Ontario’s economic performance.

The reserve has been set at $1.0 billion in 2024–25, $1.5 billion in 2025–26 and $2.0 billion 2026–27, unchanged from the levels in the 2024 Budget. In addition, the Contingency Fund is maintained to help mitigate expense risks — for example, in cases where health and safety may be compromised, and which may otherwise adversely affect Ontario’s fiscal performance.

The government will work to preserve the fiscal flexibility necessary to respond to unforeseen events and support a long-term plan that will enhance transparency and accountability, invest in the future of Ontario, and help protect the province against potential economic challenges.

Leadership in the Federation and Standing Up for the People of Ontario

The federation works best when all orders of government work together. Ontario calls on the federal government to eliminate the federal carbon tax, which has increased inflation and made life less affordable for the people of Ontario. With Premier Ford as Chair of the Council of the Federation, the Ontario government continues to work closely with the federal government and other provinces and territories to promote economic growth and prosperity across the federation. Provinces and territories are facing pressures on services and infrastructure due to record population growth and immigration levels. In addition, geopolitical and global economic uncertainty require increased collaboration to protect Canada’s national economic and security interests. Ontario has an opportunity to drive the agenda and ensure that the province’s priorities are reflected.

Effective federal–provincial transfers are key to ensuring sustainable public services. Further collaboration with the federal government is needed to support critical infrastructure. With the end of the first Investing in Canada Infrastructure Program more than 18 months ago, Ontario joins all provinces and territories to continue to call for a new, long-term, predictable infrastructure program with sufficient funds to support the unique needs of each jurisdiction, without complex and onerous conditions. In addition, the provincial government calls on the federal government to accelerate funding commitments for them, including the Canada Housing Infrastructure Fund, to allow investments in shared infrastructure priorities that are driven by historic population growth.

These pressures on infrastructure apply equally to other provincial programs and services. Addressing recent reductions in labour market funding through the Labour Market Transfer Agreements, ensuring long-term funding levels to support Canada-wide Early Learning and Child Care Agreements, and adequate support for asylum seekers are areas where the federal government can take immediate action. The long‐term pressures facing health systems continue to be a significant challenge for all provinces and territories. Ontario looks forward to upcoming health agreement reviews to ensure sustainable federal support for health care in the years to come.

The government is working to create a stronger economy by driving economic growth, boosting productivity and making Ontario a prime destination for businesses to invest and grow. Working with the federal government, the provincial government secured major investments across Ontario’s electric vehicle (EV) supply chain and is helping to encourage the construction of new purpose‐built rental housing in Ontario by removing the HST on qualifying projects. Ontario requests that the federal government continue to work with the province to ensure an attractive investment climate. This includes developing Ontario’s energy and electrification infrastructure for domestic consumption and for export.

As Ontario continues to secure its position as a global leader of responsibly sourced critical minerals, it is important that the federal government match Ontario’s funding commitments and collaborate on regulatory efficiencies that would enable the development of the Ring of Fire and generate considerable economic benefit to Indigenous and Northern communities.

Canada shares a unique economic relationship with the United States, as its closest trading partner and the largest economy in the world. The prosperity and security of Canadians and Americans are integrated and mutually beneficial. There is no partner better positioned than Ontario to support their friends and allies south of the border. With its abundant supply of critical minerals and as a global leader in the future of nuclear energy, Ontario is uniquely positioned to support the United States’ economic growth and its national security objectives. This is why Ontario continues to call on the federal government to pause the implementation of the Digital Services Tax. Unilaterally implementing this tax is expected to have a negative impact on a mutually beneficial trading relationship. These are risks that Ontario families, businesses and workers cannot afford.

Transparency and Risks

The government is committed to being open and transparent about the state of Ontario’s finances. This principle is reflected in the Fiscal Sustainability, Transparency and Accountability Act, 2019, which stipulates that Ontario’s fiscal policy should be clearly articulated and information about it should be readily available to the public without charge.

While mid-year updates to the government’s finances are informed by the latest information available, key information still to be received over the remainder of the fiscal year may present further upside and downside risks, which could materially affect the fiscal outlook. Revenue could be affected by new information from the Canada Revenue Agency on tax return processing for previous taxation years, changes in the economic outlook and the evolution of private-sector economic forecasts, which the province uses to develop its own revenue projections. Expenses could be impacted by changes in utilization of large demand-driven programs.

To ensure a reasonable and prudent economic forecast, the government’s key economic planning projections are set below the average of private‐sector forecasts in each year. For 2024 onwards, the planning assumptions are set 0.1 percentage points below the private‐sector average to reflect the elevated degree of uncertainty over the outlook.

While the planning assumptions for economic growth are reasonable and prudent, the Ontario Ministry of Finance has also developed Faster Growth and Slower Growth scenarios to provide greater transparency around Ontario’s economic and fiscal outlook amid heightened economic uncertainty.

The current taxation revenue outlook includes the projected impact of the federal Budget 2024 announcement to increase the inclusion rate on capital gains realized annually above $250,000 by individuals and on all capital gains realized by corporations and trusts from one-half to two-thirds, effective June 25, 2024.

As a matter of transparent fiscal management, financial pressures are monitored throughout the fiscal year by the Ontario Treasury Board Secretariat, with the goal of ensuring that robust and prudent methodologies are used to develop forecasts. Other important risk management tools include closely tracking the pace of implementation of initiatives and proactively identifying emerging program and policy risks. Comprehensive analysis of known pressures informs the fiscal planning processes, including the development of plans to mitigate and manage fiscal pressures, as well as maintaining adequate contingencies as part of the medium-term fiscal projections in respect of the government’s flexible fiscal plan to respond to uncertainty and risks.

In addition to the key demand sensitivities and economic risks to the fiscal plan, there are risks stemming from the government’s contingent liabilities. Whether future events will result in actual liabilities for the province is beyond the direct control of the government. For example, losses could result from legal settlements or a call on loan or funding guarantees. While a Contingency Fund is included in the fiscal plan to help mitigate the expense risks, until there exists certainty around the likelihood and costs of these future events, these risks are not included in the province’s fiscal plan. Provisions for losses that are likely to occur and can be reasonably estimated are expensed and reported as liabilities in Ontario’s financial statements. Any significant contingent liabilities related to the 2023–24 fiscal year have been disclosed as part of the Public Accounts of Ontario 2023–2024, released in September.

Agency Oversight

Provincial agencies play a crucial role in delivering essential public services to individuals, families and businesses throughout Ontario. In the 2024 Budget, the government committed to implementing new measures and reporting requirements to enhance agency oversight. For instance, this fall, the government mandated agencies to report on human resource data and align their business plans with government priorities. These changes will ensure that provincial agencies continue to serve the best interests of the people of Ontario while providing value for taxpayers’ money.

Summary of Significant Accounting Policies

To fully comply with Public Sector Accounting Standards, interest and investment income will no longer be subtracted from interest on debt and will be reported separately as a revenue by the 2025 Budget. The impact of this change is fiscally and economically neutral and represents an accounting reporting and presentation change.

Details of Ontario’s Finances

 

Chart Descriptions

Chart 3.1: Current Surplus/(Deficit) Outlook Compared to the 2024 Budget

The bar chart illustrates the surplus/deficit outlook presented in the 2024 Budget compared to the current outlook in the 2024 Ontario Economic Outlook and Fiscal Review. The 2024 Budget projected deficits of $9.8 billion in 2024–25 and $4.6 billion in 2025–26, before projecting a surplus of $0.5 billion in 2026–27. With the release of the 2024 Ontario Economic Outlook and Fiscal Review, the surplus/deficit projections have been revised to deficits of $6.6 billion in 2024–25 and $1.5 billion in 2025–26, and a surplus of $0.9 billion in 2026–27.

Source: Ontario Ministry of Finance.

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Chart 3.2: Ontario Fiscal Outlook Scenarios

The bar chart illustrates the range of Ontario fiscal outlooks based on the two alternative economic scenarios presented in Chapter 2: Economic Performance and Outlook. The 2024 Ontario Economic Outlook and Fiscal Review fiscal outlook estimates deficits of $6.6 billion in 2024–25 and $1.5 billion in 2025–26, before reaching a surplus of $0.9 billion in 2026–27. Under the Faster Growth scenario, the deficit is estimated to be $4.2 billion in 2024–25, followed by surpluses of $6.2 billion in 2025–26 and $11.4 billion in 2026–27. Under the Slower Growth scenario, the deficits are estimated to be $8.8 billion in 2024–25, $8.4 billion in 2025–26 and $8.3 billion in 2026–27.

Source: Ontario Ministry of Finance.

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Chart 3.3: Composition of Revenue, 2024–25

The pie chart shows the composition of Ontario’s revenue in 2024–25, which is projected to be $212.6 billion. The largest taxation revenue source is Personal Income Tax revenue at $54.8 billion, accounting for 25.8 per cent of total revenue. This is followed by Sales Tax at $40.0 billion, or 18.8 per cent of total revenue; and Corporations Tax at $27.9 billion, or 13.1 per cent of total revenue. Other components of taxation revenue include Education Property Tax at $5.8 billion, or 2.7 per cent of total revenue; Employer Health Tax at $9.0 billion, or 4.2 per cent; Gasoline Tax and Fuel Tax at $2.3 billion, or 1.1 per cent; the Ontario Health Premium at $5.1 billion, or 2.4 per cent; and Other Taxes at $6.8 billion, or 3.2 per cent of total revenue.

Total taxation revenue accounts for $151.7 billion, or 71.3 per cent of total revenue.

The other major non-taxation sources of revenue are Federal Transfers at $36.3 billion, or
17.1 per cent of total revenue; Income from Government Business Enterprises at $6.7 billion, or
3.1 per cent of total revenue; and various Other Non-Tax Revenue at $18.0 billion, or 8.5 per cent of total revenue.

Note: Numbers may not add due to rounding.

Source: Ontario Ministry of Finance.

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Chart 3.4: Composition of Expense, 2024–25

The pie chart shows the share of Ontario’s total expense and dollar amounts by sector in 2024–25.

Total expense in 2024–25 is projected to be $218.3 billion.

The largest expense is the Health Sector at $86.0 billion, accounting for 39.4 per cent of total expense.

The remaining sectors of total expense include the Education Sector¹ at $37.6 billion or 17.2 per cent; the Postsecondary Education Sector at $12.2 billion or 5.6 per cent; the Children, Community and Social Services Sector at $20.0 billion or 9.2 per cent; the Justice Sector at $6.2 billion or 2.8 per cent; and Other Programs at $43.6 billion or 20.0 per cent. Interest on Debt, included as part of total expense, is $12.7 billion or 5.8 per cent.

¹ Excludes Teachers’ Pension Plan. Teachers’ Pension Plan expense is included in Other Programs.

Note: Numbers may not add due to rounding.

Sources: Ontario Treasury Board Secretariat and Ontario Ministry of Finance.

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Footnotes

[1] The current taxation revenue outlook includes the impact of the federal Budget 2024 announcement to increase the inclusion rate on capital gains realized annually above $250,000 by individuals and on all capital gains realized by corporations and trusts from one-half to two-thirds, effective June 25, 2024. The projected impacts of federal changes to the inclusion rate are expected to total $3.3 billion over the 2024–25 to 2026–27 period.