Posted at 7:35 p.m.
“We take advantage of the situation which is the election campaign to give candy, but basically, it’s a kind of opportunism that looks more like old politics than anything else. It would be possible to be much more imaginative than that, to help the real world,” says tax expert André Lareau, associate professor at the Faculty of Law at Université Laval.
In its “anti-inflation shield”, François Legault’s CAQ promises a 1% drop in the first two tax brackets, from 2023, an annual saving of up to $810. Dominique Anglade’s PLQ promises a 1.5% drop in the first two tax brackets, which represents up to $1,125 per year. In the first case, the measure would release around 1.8 billion in tax cuts, each year. And in the second, it would be 2.5 billion. Eric Duhaime, he proposes a reduction of two percentage points of the first two levels of taxation, but did not reveal how much it would cost the Quebec state.
But a tax cut “does not target the right people,” said Mr. Lareau. He recalls that “even those who earn more than $200,000 will have a tax cut when, let’s be honest, they don’t really need it, or at least, much less”. “If we really want to have an impact, then let’s come up with targeted measures for those who are in need. Let’s stop saying that everyone has the same needs, that’s not true,” adds Mr. Lareau.
Other experts share his view. Because between July 2021 and July 2022, wages rose a little faster than inflation in Quebec. (+8% for the average hourly wage, against +7.3% for inflation.) The most vulnerable, from this point of view, could therefore probably be better served by a solidarity credit, or direct aid, say some observers.
“The tax cut is not the right way to give money back to those who really need it. We know that this is not a good way, for the simple and good reason that these people do not pay enough taxes,” says Olivier Jacques, professor of public policy at the University of Montreal.
Both François Legault and Dominique Anglade argue that this tax cut will help fight inflation. But as the columnist of The Press Paul Journet, it is a “recurring solution to a temporary problem”, which on the contrary even risks aggravating the problem of the rising cost of living, by stimulating demand.
More money, or more services?
Olivier Jacques also points out that a tax cut is always a form of “barter” of advantages and disadvantages, which the public sometimes forgets to consider. “We give money back to people, of course, but that means that they will have fewer public services. It’s a collective choice that we make by lowering taxes,” continues Mr. Jacques.
What’s more, with a tax cut, the state “deprives itself of revenue” without addressing “the increase in public spending”, continues the professor. From 2022-2023 to 2024-2025, these should increase by 2.4%, 3.4% and 2.6% respectively, according to the latest government projections.
The liberal leader Dominique Anglade had also clearly mentioned it in a press briefing: according to her, it is not the taxpayers who must pay for the increase in the cost of living, but the state. “There is a message that is very clear: we do not want it to be Quebecers who go into debt versus the government,” she argued.
But André Lareau warns: “In times of inflation, lowering taxes is not the magic recipe. “We have a large debt, and the interest on the debt will increase, whatever we say,” he raises.
At the University of Montreal, the economist Michel Poitevin finally raises that the tax cut in Quebec will only be “partial”. “Let’s not forget that we also have the federal tax which continues to be imposed and which will not change immediately. Taxation is never an easy subject, but promising a tax cut affects everyone, even the rich,” he concludes.