With the resurgence of inflation, which has become a major electoral issue, it was to be expected that the political parties would compete in imagination to “put money back in the pockets of the taxpayers”, as the consecrated expression. Even Québec solidaire promises to become the “portfolio party of Quebecers”. That is to say.
After the Conservative Party of Quebec, it is to date the Liberal Party of Quebec that has pledged to provide the tax relief with the greatest consequences for the coffers of the State, with what Dominique Anglade has called without laughing the “Portfolio Plan”.
Liberal pledges already total nearly $4 billion a year, and another billion will be added later in the campaign.
The PLQ proposes to reduce the rate of each of the first two tax brackets by 1.5 percentage points. For the poorest, the solidarity tax credit would be increased by 25%. Dominique Anglade has also promised to freeze electricity rates for at least a year and to abolish the Quebec sales tax (QST) on the first $4,000 of the bill for residential Hydro-Quebec customers. The QST would also be eliminated on basic necessities, such as soap, toothpaste and non-prescription drugs. However, if lowering taxes for the middle class can stimulate the economy, playing with the QST is not a good idea.
The Liberal leader had barely finished her press briefing when François Legault announced for his part the reduction of 1% of the same levels. This is the first of four measures of its “anti-inflation shield”. The CAQ leader is not afraid to project himself into the future since he intends to pursue the objective of reducing these tax rates by 0.25% per year during the third term of his party and until 2032.
It is already certain that a CAQ government would send Quebecers a check by December and, later this week, François Legault will announce a measure to support low-income families.
Not only is the Liberal commitment more onerous than that of the Coalition avenir Québec, but the way to absorb the cost of tax relief is different. Over the term of office, the Liberals would deprive the state of some 15 billion, more than double the CAQ promise. Dominique Anglade acknowledged that part of this sum would increase the public debt and delay the achievement of a balanced budget. It is an approach that contrasts with the obsession with budgetary austerity in which the last Liberal government indulged. But the PLQ — the new and the old, one might say — is not short of a contradiction.
The solution concocted by Eric Girard is much more elegant. This involves reducing annual payments to the Generations Fund by 39%. No need to increase debt or interest payable. The state’s ability to finance public services remains intact.
However, this would affect the debt-GDP ratios governed by the Debt Reduction Act. But the Auditor General, in his analysis of the pre-election financial report, confirmed that one of the two targets would already be achieved while the other could be achieved before the 2026 deadline. Contrary to what Force Jeunesse claims, which opposed to this plan, going into debt instead of reducing payments to the Generations Fund has the same effect on the ratios.
By boosting government revenues, inflation creates much of this windfall to help families cope with inflation. However, returning money to taxpayers now is paradoxical since the Bank of Canada is going in the opposite direction by trying to slow down household spending. It must be believed that politics, especially during an election period, has other imperatives.