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The province of Ontario’s next budget is “business and rail friendly,” according to the Railway Association of Canada (RAC).

Tabled late last month, the budget — which proposes total spending of $88 billion in fiscal-year 2009/10 and $26.3 billion for infrastructure improvements over two years — would provide cost savings and funds for freight and passenger railroads, and improve investment conditions, said RAC President and Chief Executive Officer Cliff Mackay in a prepared statement.

The budget will generate about $35 million annually in rail industry savings, he said. In addition, the province has proposed an infrastructure upgrade package for Ontario short lines, which RAC officials hope the provincial government moves to approve in the near future.

Passenger-rail infrastructure projects that would benefit from the budget include a grade separation in west Toronto on GO Transit’s Georgetown Line and a new third track on the agency’s Lakeshore West corridor.

The budget also calls for a new 13 percent value-added tax, which would take effect on July 1, 2010, and a drop in corporate income tax rates from 14 percent to 12 percent.