Quebec Finance Minister Eric Girard unveiled his latest budget on Tuesday between now and the next general election, in which he plans to spend $22 billion over five years as well as $500 compensation for inflation. which will be paid to almost all Quebec taxpayers by the October vote.
The budget plan for 2022-2023 includes the granting of a refundable tax credit of $500 to 6.4 million Quebecers. The aim is to mitigate the effects of the rising cost of living.
This temporary measure is offered to adults with an income of $100,000 or less so that they can “better protect themselves against the consequences of inflation”. Those earning between $100,000 and $105,000 will receive a lower amount, which will be determined based on their income.
The refundable tax credit will be granted without distinction to students, workers, beneficiaries of last-resort financial assistance programs and retirees, provided they file an income tax return for the year 2021. Depending on the case, it will increase the tax refund or reduce the expected payment.
The “$500 immediate relief” notably comes on top of the one-time cost-of-living benefit of $200 or $275 that was paid to 3.3 million low- and middle-income people last fall .
Electoralism
During a press conference, Mr. Girard denied having paid into electoralism by tabling a budget that includes $ 22 billion in new spending by 2027-2028. “There have been electoral budgets in Quebec and at the federal level,” he said. We think it’s counterproductive. »
The minister admitted, however, that his new spending exceeded the 3 billion expected on average each year in the government’s budget plans. “We are at inflation rates which are not usual and there are additional expenses, which are linked to the pandemic, which are responsible and necessary”, he explained.
Mr. Girard stated that the compensation of $500 was intended to make up the difference between inflation and the indexation of the parameters of the tax system applied to a consumption of $25,000.
The Minister acknowledged that the decision to cap eligibility for the maximum amount at $100,000 of income was arbitrary. “We compensate for the basic consumption basket, ie housing, food, clothing, transportation,” he said. And in this sense, all Quebecers are affected by the rise in inflation, and we have drawn a line. »
Liberal deputy Carlos Leitão accused the government of having presented an “electoralist and visionless” budget. “His priority is not the well-being of Quebecers, but getting re-elected,” said the Liberal finance critic. François Legault looks no further than October 3. We could even rename this budget “Horizon elections”. »
The compensation for inflation is only a return on the taxes collected in addition thanks to the rebound of the economy, estimates the former Minister of Finance, who regrets that it is granted so widely. “We should have been much more targeted,” said Mr. Leitão. There are much more vulnerable groups that are more affected by the rising cost of living. The $500 to everyone isn’t particularly brilliant. »
Inflation stronger than expected
The cost of living will increase by 4.7% in 2022 – and not by 2.9% as the government predicted last November. Inflation has been exacerbated by the strong post-pandemic global economic recovery and the Russian invasion of Ukraine, Girard said on Tuesday.
The budget projects revenue of $138.5 billion in 2022-2023, up 2.2%. Expenditure will amount to 136.6 billion next year, which represents a growth of 4.8%.
Taking into account a deposit in the Generations Fund, the financial measures related to COVID-19 and a provision for risks, the budgetary balance shows a deficit of $6.5 billion for 2022-2023. The return to a balanced budget remains set for 2027-2028.
Electricity and taxes
More recently, Premier François Legault announced that the effect of inflation on Hydro-Québec’s rate increase in 2023 would be limited to 3%. Rates have recently been aligned with changes in the cost of living. .
The budget does not give any details on this subject, but Mr. Girard said on Tuesday that he intended to materialize Mr. Legault’s commitment other than with a one-time credit like the one paid this year to offset inflation. “We need to have the appropriate mechanism to avoid these exceptional circumstances,” he said.
Mr. Girard said the government still has a “long-term” goal of lowering taxes when budget surpluses emerge. “Before reducing the tax burden, we must be able to see surpluses,” he specified, however.
The Minister has taken the trouble to point out that without counting the planned payments to the Generations Fund, a balanced budget will be achieved “in the accounting sense” in 2023-2024.
Mr. Legault recently signaled that he would wait until the next election campaign to clarify his intentions regarding tax cuts.
Health and economy
Tuesday’s Girard budget outlines the investments that will be needed to restore the health care network, or $5.2 billion over five years.
Quebec extends 4.2 billion to promote the recovery of an economy that has been greatly upset over the past two years.
To combat the labor shortage in particular, the government is essentially counting on an increase in business productivity: more than half of the sums allocated to the recovery (2.2 billion) will be paid over the next five years. research and development, the digital shift and new technologies. Part of the sums intended for the recovery (1.5 billion) will be used for regional development, including 627 million to stimulate the agri-food sector.
In addition, Mr. Girard has pledged to set next year a “new debt reduction target covering the next 10 or 15 years” if voters – and Mr. Legault – renew their confidence in him by now. the.
With Ulysse Bergeron, Clémence Pavic and Marie-Michèle Sioui