From the start of the election campaign, the main parties presented their proposals to help Quebecers cope with the rising cost of living. General or targeted tax cuts, zero-rating of essential products, direct assistance to segments of the population — the formulas vary. Political parties have been able to compete in this way because the Quebec state collects additional revenue.
Posted at 11:00 a.m.
The Department of Finance, which had forecast that the year would end with a deficit of $6.5 billion, now estimates that the year will end with a surplus of $1.5 billion. This reversal of the situation is explained by the rise in consumer prices, which increases the amount collected in sales tax (QST), and by the increase in the wages of many workers, which increases revenue from income tax. .
Increased spending for municipalities
Municipalities are in the opposite situation: inflation has led to additional expenditures of $1 billion for the year 2022. This contrast is explained by the fact that municipalities have only a very small share of tax spinoffs activities that take place in their territory. Most taxes and duties are paid to Quebec and Ottawa.
Over the past two years, some progress has been made; the municipalities receive a point from the growth of the QST. However, this is insufficient to offset the skyrocketing costs, especially in a context where the responsibilities entrusted to municipalities are increasing.
Rising costs for fuel, asphalt, concrete, professional services and other expenses are weighing heavily on municipalities, which have little room to manoeuvre. And this, in addition to the costs they will have to assume to fight climate change. It should be remembered that municipalities are dependent on property tax, which represents 55% to 70% of their budget. However, increasing the property tax would add to the burden on citizens already hit by inflation.
The next government will have to be attentive to the needs of the municipalities because this worrying situation is inter alia thwarting the development plans for social and affordable housing, which is a priority.
Party leaders invited to propose their solutions
We will have the opportunity to hear what the party leaders have to say about these issues and many others on September 16, when the Union des municipalités du Québec electoral summit will be held.
The municipal sector will then submit some twenty recommendations concerning finance and taxation, regional development, the regionalization of immigration, land use planning and infrastructure. These discussions will be of great importance since they will launch the negotiation process for the next fiscal and financial partnership between the government and the municipalities.
Let’s realize that if the government garners additional revenue while the financial situation of municipalities is weakening, a stalemate could result that would penalize citizens.