Quebec budget | $500 for 6.4 million Quebecers

Six months before the general election, the Legault government will pay $500 to the vast majority of Quebecers, a $3.2 billion gift paid for by much larger state revenues than expected in 2021.

Charles Lecavalier
The Press

This sum will compensate “from now on” people who face an increase in the cost of housing, food and transport. All adults with an annual income of $100,000 or less, after tax deductions, will be eligible: that’s more than 90% of the population. The sum will be paid automatically to all those who have filed a tax return in 2021.

The high level of inflation, which should reach 4.8% in 2022, “represents a significant additional burden for low-income households”, but the Legault government has chosen to go with a measure also targeting well-off people. . Why ? “All Quebecers are affected by the rise in inflation,” explained Finance Minister Eric Girard.

Only 400,000 taxpayers will not be entitled to the $500 cheque.

His government can afford to jingle the coffers in an election year due to higher than expected revenues in 2021. The state collected 9.4 billion more than it had anticipated a year ago because of the ” good performance of the economy”, including $3.2 billion in taxpayers’ pockets, which is the exact cost of paying out the $500 cheque.

“Quebecers fund the checks themselves,” lamented Liberal finance critic Carlos Leitão, who denounces this “electoralist” budget. “We should have been much more targeted. There are certainly groups that are more vulnerable and affected by the rising cost of living, and we gave everyone $500. I don’t find it particularly brilliant,” Leitão said. More direct, the deputy of Quebec solidaire Manon Massé believes that Mr. Legault is “raining checks” to “go to the cash register” on October 3.

The Russian invasion

After the pandemic in 2020, another crisis shakes up Minister Girard’s budget: inflationary pressure is explained in particular by the Russian invasion of Ukraine. Forecasters from the Ministry of Finance expect it to continue until 2023. It is pointed out, for example, that “the war in Ukraine [a] already led to higher energy prices. The threat of a recession looms and Mr. Girard has included in his financial framework a $2.5 billion “economic risk provision” for the current year to protect himself.

But in the short term, public finances are doing well. Real GDP grew by 6.3% in 2021, after a decline of 5.5% in 2020, and will grow by 2.7% in 2022. The Québec economy has returned to its pre-pandemic level, unlike Ontario.

Last March, the Ministry of Finance predicted a structural deficit of 6.5 billion this year. It will eventually be 2.8 billion. Quebec is therefore two years ahead of its schedule for returning to a balanced budget, even if Minister Girard still believes that it will be achieved by 2027-2028. This year, the total deficit, including payments to the Generations Fund, is $6.5 billion, but it will shrink rapidly in the coming years. As for the weight of the debt, it is “under control in the long term”.

Tax cuts

“The return to a balanced budget, we can see it on the horizon,” said Finance Minister Eric Girard. Last week, Prime Minister François Legault hinted that a tax cut could be found in the electoral platform of the Coalition avenir Québec. Mr. Girard is not closing the door to a reduction in the tax burden. Achieving this, he says, requires “seeing a balanced budget,” not necessarily achieving it.

In the longer term, economic growth will be more limited with an annual increase of 1.5% starting in 2024. To completely erase the structural deficit without help from Ottawa, “it would take an annual increase of 2%”, acknowledged Minister Girard. The Legault government, which has made catching up with the wealth gap with Ontario its hobbyhorse, also sees the Canadian economy grow faster than that of Quebec in 2022 and 2023.

In addition to helping individuals, Mr. Girard targets the essential missions of the State, namely health, education, the economy and the environment. For the details, Quebec is going there with the strategy of striptease. The Minister of the Environment, Benoit Charette, will present the update of his Plan for a green economy with an increase of 1 billion in a few weeks, as will the Minister of Health, Christian Dubé, and his “refoundation” of 5 ,2 billion. The community sector will receive 1.2 billion over five years, to be seen later.

In higher education, the 13% growth in spending notably includes the “Perspective Québec” scholarships, announced in the fall. In education, the 5.4% increase is explained, for example, by the enhancement of the tutoring program.

Opposition reactions

With Fanny Lévesque, The Press