Premier Dalton McGuinty has been under attack from all sides of the political spectrum for Ontario’s dismal economic performance under his government’s stewardship. The simply reality is that the policies of the current government have not worked and the time has come for Premier McGuinty to lead. To help re-establish Ontario as Canada’s economic leader, the 2008 Ontario budget must reduce taxes to create an economic environment that promotes, rather than punishes, economic activity. There is no doubt that Ontario’s economic performance has deteriorated over the past decade. From 1997 to 2002, economic growth in Ontario was consistently higher than the national average. But since 2003, Ontario has consistently been below average. Economic forecasts indicate that Ontario is expected to rank last among the provinces in economic growth in 2008 and 2009. While part of the explanation for Ontario’s economic woes stem from external forces such as the rising Canadian dollar and a declining manufacturing sector, the policies implemented by the Ontario government have contributed to, rather than mitigated the provinces economic woes. Leading the pack of poor policies are the tax increases implemented by Premier McGuinty since 2003. Personal income taxes have increased due to the introduction of the Ontario Health Premium and the cancellation of the planned elimination of the personal income surtax. As a result, Ontario’s high marginal personal income tax rates continue to discourage Ontarians from increasing their work effort, saving, investing and engaging in entrepreneurial activities. The government also increased corporate income taxes from 12.5 per cent to 14 per cent, significantly decreasing the incentive for businesses to invest. Ontario now maintains the 6th highest corporate income tax rate among the Canadian provinces. While Ontario has increased personal and corporate income taxes, governments of all ideological strips in western Canada have been busy pursuing pro-growth tax policies. Conservative-led Alberta decreased its corporate income tax rate to 10 per cent from 12.5 per cent; Liberal-led British Columbia dropped to 11 per cent from 13.5 per cent; Saskatchewan’s previous NDP government cut to 12 per cent from 17 per cent; and Manitoba’s current NDP government went to 13 per cent from 16 per cent. On the personal income tax side, residents of Alberta, British Columbia, and Saskatchewan continue to face the lowest top-marginal rates in Canada. Unfortunately, Premier McGuinty continues to repeat the myth that tax cuts must be accompanied by aggressive spending cuts. Consider though that program spending has increased by an average of 7.1 per cent per year since 2003/04, well beyond inflation and population growth (3.0 per cent) and economic growth (4.4 per cent). Had the government actually limited spending increases to inflation and population growth, $31 billion in tax relief could have been implemented since 2003/04. While the past cannot be changed, the last thing Ontario needs from the 2008 provincial budget is more of the same. If Premier McGuinty and his government are to help turn the tide on Ontario’s lacklustre performance and place it on a new trajectory of economic opportunity, they must provide much needed leadership and cut taxes with the aim of improving the incentives for productive economic activity.