Full Breakdown
Ontario Prepares Fall Economic Statement Amid Growing Deficits and New Tax Incentives
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In this breakdown
01
Background and Fiscal Context
Ontario closed the 2025-26 fiscal year with a $13 billion deficit. The province’s spring budget projected a $13.8 billion shortfall for the current year, and Finance Minister Peter Bethlenfalvy has indicated that the upcoming fall statement will show an even larger gap. He argues that while deficits are undesirable over the long term, they are necessary given the slower economy and ongoing trade tensions with the United States. Bethlenfalvy also notes that Ontario has weathered the impact of American tariffs better than economists originally expected.
02
Key Policy Measures
To stimulate investment, the provincial government is matching a recent federal move that offers businesses a tax break on capital expenditures. In addition, Premier Doug Ford announced more than $8 billion in joint funding to support industries hit by tariffs, including a $1.67 billion steel action fund and $1 billion for the automotive sector. Earlier in the week, Bethlenfalvy unveiled $8 billion in tax relief aimed at encouraging business investment. He also said ministries and agencies are under review for cost savings, with a focus on “curtailing head counts” that will not translate into public-sector layoffs.
03
Opposition Reactions
Marit Stiles, leader of the New Democratic Party, criticized the government’s spending, urging cabinet ministers to reduce their own expenses and labeling the deficit “shameful.” John Fraser, interim Liberal leader, argued that the Progressive Conservatives are using the trade war as a blanket justification for policies that provide limited relief to ordinary Ontarians. Mike Schreiner, Green Party leader, called for a wealth tax on the province’s richest residents to fund affordability measures without raising taxes on small businesses or essential professionals.
04
Data & Statistics
- 2025-26 deficit: $13 billion
- Spring budget forecast for current year: $13.8 billion deficit
- Joint funding for tariff-hit sectors: > $8 billion (including $1.67 billion for steel and $1 billion for automotive)
- Business tax relief announced: $8 billion
05
Outlook
Bethlenfalvy projects that Ontario will return to a balanced budget by the 2028-29 fiscal year, contingent on the effectiveness of the tax incentives and spending reviews outlined in the fall economic statement. Opposition parties continue to demand clearer fiscal discipline and additional measures such as a wealth tax to address affordability concerns.