Struggling with a record deficit of $11 billion, the Legault government is postponing a return to balanced budgets until 2030. To get its head above water, Quebec is cutting aid to businesses and tightening the belts of State and tax smokers. But the worst is yet to come.
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Written in dark red ink, Eric Girard’s sixth budget sows the seeds of austerity, but the minister denies it. The deficit is almost four times higher than expected. Even at the height of the pandemic, the hole ($10.7 billion in 2020-2021) had not reached this level.
Stevens LeBlanc/JOURNAL DE QUEBEC
The health of public finances is weighed down by economic stagnation, natural disasters and the agreement with teachers, which costs more than $3 billion more per year.
Minister Girard also places much of the blame on COVID-19 and the recession that followed. He hopes that people will not judge him too harshly and remember that he inherited an exceptional situation.
- Listen to the analysis of Antoine Robitaille, columnist at the Journal de Montréal et de Québec, with breaking news on the budget on QUB:
“The pandemic has left us with permanent impacts in the health network,” defended the government’s big financier. From now on, we will always keep stocks of masks, we will always keep vaccination clinics.
Former banker, Eric Girard wanted to be reassuring. The deficit is “manageable”, he assured. He is betting big on an improvement in the second half of the year. But the difficult choices are postponed until next year. It is at this moment that Quebecers will know the extent of the austerity measures which will allow us to return to a zero deficit.
Revision of taxes
Quebec promises to undertake a review of all of its spending. Even the personal income tax system and that of consumption taxes will be scrutinized.
Minister Girard swears, however, that there is no question for his government of raising taxes on citizens or increasing the QST to make up the deficit. For the rest, everything is on the table.
A slimming cure is also beginning in the ministries, but there is no question of cutting civil servants, warned the president of the Treasury Board, Sonia LeBel.
If the CAQ does not intend to announce its precise plan to return to budget balance until next year, several ministries will taste the dry regime this year. This is the case for Tourism, which is seeing its program spending decrease by more than 7%, while the Ministry of the Environment will have to reduce it by 1.4%.
No more subsidies for electric cars
Until then, Quebec sounds the death knell for tax credits for companies that employed retirees, a measure put in place by the CAQ not so long ago to counter the labor shortage. “It is not very efficient, very little demanded by businesses,” said the minister, behind closed doors of the budget.
The main state-owned companies like Hydro-Québec or Loto-Québec will have to tighten their belts to find $1 billion over five years.
Better hurry if you wanted to get an electric car at a good price. The subsidy granted to the purchase of a green car will drastically decrease by almost half on 1er next January, before disappearing completely in 2027.
The government will seek money from the owners of the little ones. It will no longer be possible to sell your ten year old bazou for $1. You will now have to pay sales tax on all cars less than 15 years old.
Smokers will also suffer. Starting tomorrow, smoking a cigarette will cost more, while the price of a cartridge will increase by $2. Cigarette lovers will have to endure a second increase next January.
Despite the difficult context, Minister Girard promises to put Quebec’s public finances in good condition for his successor. He already predicts that it will be a woman…
What they said:
“The plan to return to balance will require real actions, but it is manageable.”
– The Minister of Finance, Eric Girard
“The CAQ has lost control of public finances. The CAQ no longer understands how to create wealth.”
– Liberal Frédéric Beauchemin
“The biggest deficit in this budget is in housing. There is one word missing next to health and education, and that is housing.”
– Solidarity Haroun Bouazzi
“It’s disappointing that we’re going backwards on the debt-to-GDP ratio […] But this is not a doomsday scenario. We are talking about a lack of prudence in the 2023 budget [avec les baisses d’impôts].”
– PQ leader, Paul St-Pierre Plamondon