The New Democrats would raise the hourly minimum wage in Ontario to $12 over a two-year period, while simultaneously cutting down the province's small business taxes, if they form the next government.

NDP leader Andrea Horwath made the promises at campaign stop at a Tim Hortons in the riding of York West, where NDP candidate Tom Rakocevic is trying for a second time to unseat Liberal Mario Sergio.

Horwath promises to up minimum wage

NDP leader Andrea Horwath orders a green tea after promising to increase the minimum wage. (CBC)

Horwath said the New Democrats will be "sensitive" to the impact a higher minimum wage would have on job creators.

She says her plan would involve a gradual increase — 50 cents over the next two years — while also tying the raise to inflation to ensure a fair minimum wage in the future.

The Liberal government, in the budget they released last week, had proposed raising the minimum wage to $11 an hour on June 1, with legislation planned to index it to inflation.

Both Horwath and the Progressive Conservatives refused to support the fiscal plan, setting the stage for the June 12 election.

Horwath says New Democrats would also reduce the small business tax rate to three per cent over two years — a move she says would help them absorb the impact of higher wages.

She says such an approach would help businesses who have had a hard time dealing with "other impacts" such as rising electricity rates under a Liberal government.

With files from The Canadian Press