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Ontario Premier Dalton McGuinty threatened to take Ontario to a general election Thursday if the opposition parties couldnt agree on a deal to pass the budget.

This is about Ontarios economic livelihood and our ability to continue steering the province in the right direction in these challenging times, McGuinty said in a statement.

Its absolutely imperative that we pass this budget. And if we cannot pass this budget, we will take it to the people in a general election.

Kelly McParland: C.D. Howe pokes a big hole in NDPs high-tax fantasies

A new wealth tax in Ontario, to take effect in July, will not raise anywhere near the revenue projected, and will cost the country dearly within a few years.

Alexandre Laurin, author of the [C.D. Howe Institute] report, notes that the ease with which high-income earners can adopt strategies to reduce their taxable income means the new levy will probably be applied to a smaller pool than anticipated by New Democratic Party leader Andrea Horwath when she strongarmed Dalton McGuintys minority government into adopting it, in return for allowing the Liberals budget to pass.

The government hoped the new tax an extra 2% on incomes over $500,000, which translates into a 3.1% increase when an additional surtax is applied would raise $470 million. Laurin estimates the number will be closer to $450 million initially, falling to zero by 2019 as wealthy taxpayers adjust, and a net loss of $200 million by 2027.

The NDP had appeared ready to support the minority Liberal budget in exchange for a new tax on incomes over $500,000, and to get more hearings into the fiscal plan before next weeks vote.

But on Thursday, McGuinty accused NDP leader Andrea Horwath of reneging on the deal.

Earlier today, the NDP turned their backs yet again on an agreement to pass our budget, McGuinty said. They joined forces with the PCs to gut the governments budget bill.

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Ontario Liberals threaten election after NDP 'breaks its word'