Finance Minister Eric Girard was astonished by the cascade of comments, columns and editorials published against the general reduction in income tax — from $8 to $814 a year — included in the Budget plan A committed Quebec which he presented last Tuesday.
“At the market, everyone congratulates me and says thank you for the tax reduction. I open the newspaper… Hey boy! “he launched in front of the Board of Trade of Metropolitan Montreal on Friday, according to Bloomberg. The “permanent and dynamic” reduction in taxes has two objectives: “to increase the potential of the economy” and “to encourage the work effort”, he repeated.
The Prime Minister’s Office had, for its part, come to terms with the idea that the tax cut would be denounced by opinion leaders. “According to them, it’s never a good time to lower taxes,” smiles a political adviser to François Legault, after having counted barely three texts in favor of tax relief during his press review, including that of the adquiste leader Mario Dumont in the pages of the Montreal Journal.
The strategist “prefers” once again “to rely on the opinion of the majority” of the Quebec population — who see a good eye on the CAQ tax cut — than on that of political commentators to assess the success of tax measure. Nearly two-thirds (64%) of Quebecers believe that “lowering taxes is a good measure to help them in a context of high inflation”, he recalls, pointing to a survey carried out by Léger at the request of the Federation. of independent business a month ago.
Not only the CAQ, but also the Liberal Party of Quebec and the Conservative Party of Quebec had promised, during the election campaign, to lower the rates of the first two tax brackets : i.e. the CAQ, by 1 point; the PLQ, by 1.5 points; the PCQ, by 2 points. In short, more than 68% of voters supported a political party promising a tax cut. “There was a hell of a majority of the world who voted for tax cuts in the first two rates of the schedule,” notes the holder of the Research Chair in Taxation and Public Finance at the University of Sherbrooke, Luc Godbout. .
To achieve this, the Coalition avenir Québec team chose to deprive the Generations Fund of $1.7 billion per year rather than slashing portfolio spending or increasing the Québec government’s deficit — which would allow them, she believed, to escape criticism that she would agree to a tax reduction to the detriment of the great missions of the State. The 2023-2024 Quebec budget devotes an increase in spending on health and social services by 7.7%, and on education by 6%. “He wanted to protect himself from the risk of being criticized, of being told that he is making tax cuts by funding public services less,” underlines Mr. Godbout.
Too little for people “who struggle”?
More than one person was surprised to learn this week that “people struggling in Quebec, people struggling to pay for groceries, people paying rent that doesn’t make sense , people who work hard but end the month with empty pockets” — expressions used by Québec solidaire spokesperson Gabriel Nadeau-Dubois — will benefit from a slight tax break, namely $108 for a single person living alone and earning $30,000 per year or $210 for a single person living alone and earning $40,000 per year.
“Why the cashier who works in the grocery store deserves eight times less help in tax cuts than the CEO who will benefit from a tax cut [de 814 $] ? asked GND this week. Prime Minister François Legault retorted that the middle class also “needs help”. “What is he [Gabriel Nadeau-Dubois] tell these middle-class people: you don’t deserve help? Don’t need help? What does he tell the nurses? What does he say to the teachers? he asked.
To paint a “slightly more nuanced portrait” of the 2023-2024 Québec budget, it is necessary to take into account the increase in the refundable tax credit for solidarity of $78 intended for a person living alone in a dwelling, unless it is not subsidized, says Mr. Godbout.
Liberal MP Virginie Dufour criticized the Minister of Finance for not having “heard the cry from the heart of the thousands of Quebecers” victims of the housing crisis. In his eyes, the green light given to the construction of barely 1,500 new affordable housing units is “ridiculous”.
Why the cashier who works in the grocery store deserves eight times less help in tax cuts than the CEO who will benefit from a tax cut [de 814 $] ?
The strong reactions to the general tax cut decreed by Eric Girard are reminiscent of those heard or read after the $950 million cut announced by Jean Charest’s PLQ in 2007, in the wake of the settlement of the fiscal imbalance with Ottawa. Federal Prime Minister Stephen Harper was indignant, convinced that the money demanded by Quebec would be used to meet needs, not to lower taxes. “It made history,” recalls Luc Godbout.
Zero deficit, then more tax cuts
After keeping its flagship promise to lower taxes, the Legault government will work to return to a balanced budget by 2027-2028. “It won’t be so easy,” warns the tax expert. “You have to grow your expenses by a billion less than the growth in your income every year for four, five years,” he explains.
And after ? During the last election campaign, François Legault’s team undertook to lower the first two tax brackets by one percentage point in 2023, then by 0.25 percentage point per year from 2027 to 2032… in possible third and fourth CAQ mandates.