The widespread perception of a Quebec that has become too poor to afford quality public services does not stand up to an analysis of official data (Quebec Economic Accounts, 2001-2021). Despite numerous economic disruptions, average per capita income increased from $32,500 in 2001 to $59,000 in 2021, a real increase of around $10,000, once inflation is taken into account. Most citizens do not see this enrichment, partly because the public services they use have deteriorated, and also because the enrichment has mainly benefited high-income citizens, as all studies on evolution of income inequality.
Quebec is no exception to this trend, especially over the past two decades, as governments have broken with the traditional community spirit that inspired the Quiet Revolution. Under American influence, the idea that wealthier citizens had to pay more than their share of taxes in order to provide quality public services for all was quietly swept under the rug. Imitating the rest of Canada, Quebec has abolished the highest tax brackets taxing high-income taxpayers.
He raised the maximum amounts of contributions to RRSPs, and subsequently to TFSAs, to levels accessible only to the richest, and for whom these programs do not even play their role of encouraging savings. Professionals and other self-employed workers were also allowed to incorporate, which allows them to claim expenses that cannot be adequately verified without recruiting a new battalion of civil servants. Tax evasion has been facilitated in various ways, including the use of tax havens.
Despite these measures, the revenues of the Quebec government still increased by 4.3% per year from 2007 to 2021 (data not available before 2007) while the growth rate of the economy was 3.6%. . This sharp increase is partly explained by an increased use of pricing and by the progressiveness of the tax, but above all by the strong pressure on demand for public services while the law provides for the maintenance of a balanced budget. Indeed, since 2007, the annual growth in Quebec government spending has been 4.1%, and this growth, stronger than that of the economy, represents nine billion in additional spending in 2021.
The aging of the population is most often invoked to explain the very strong growth in public spending in Quebec. We can also think of the development of public transport, other expenses linked to the fight against climate change and the increase in the number of children with learning difficulties in schools. In-depth studies could help to understand the phenomenon more precisely and find some solutions.
It seems that governments have preferred to limit the increase in budgets uniformly and leave it to managers to manage the cuts. When you want to kill your dog, you say it has rabies. Managers don’t want to reduce their importance and they tend to make moderate cuts everywhere rather than sacrificing entire departments.
Regardless, if the need for public services has increased due to population aging and other uncontrollable factors, a democratic government should fund these new needs without cutting all other public services. There are factors that further increase the demand for public services at the expense of the demand for consumer goods. Seniors who require more care generally have less appetite for recreational vehicles, foreign travel, dining out or a country home. Citizens aware of environmental threats also tend to moderate their consumption of certain goods.
The share of public spending in Quebec’s total spending increased from 27.8% in 2007 to 29.5% in 2021. There is no reason to oppose this trend and if we adjusted the tax levies taxes accordingly, the trend would continue over the next few years.
If we accept that the quality of services has deteriorated, we understand that even higher tax revenues will be required to maintain their quality. The additional income required can only come from the richest citizens. For a large part of the middle class, taxes already take up a very large portion of income and leave only enough to meet basic needs. By slightly increasing the tax rates for incomes above $80,000 and $100,000 and integrating a tax bracket, for example, at 28% on incomes above $125,000, we could collect amounts appreciable.
It must be understood that the taxpayer only pays the rate of 28% on the part of his income which exceeds the fixed threshold. The wealthiest citizens participate in a system that has allowed them to prosper and, given their financial means, they have a responsibility to ensure that the system operates fairly and continues. The United States is running towards the precipice, should we follow them?
The business community describes a situation where governments use taxes from the rich to provide public services to everyone as a welfare state. They themselves now benefit from a real welfare state and freely demand subsidies and tax credits from governments. For most entrepreneurs, traders and managers, personal prosperity is linked to turnover and they want unlimited growth in the economy. The new governments, supposedly without resources, have adopted this objective as an economic strategy and they devote billions of dollars to it annually, to the detriment of our environment and the price of our Quebec identity.
The population of Quebec increased by an average of 59,000 per year, from 2001 to 2021, approximately a third of which was due to births and two thirds due to immigration. However, the enrichment of Quebecers observed during this period results exclusively from productivity growth, measured by the average value of production per capita. If a government decided to limit its development efforts to the modernization of businesses and the economy, it could adopt manageable immigration targets and the amounts saved in subsidies and tax credits would be so significant that the quality of services public services could be restored without a tax increase.