A Supreme Court judgment has just transformed municipal taxation into an enemy of Quebec’s economic development. Cities, hungry for new revenue, have won the right to apply the property tax to a panoply of strategic technological equipment. We barely measure the extent of the negative consequences. How far will municipal assessors be able to include equipment as part of the building under the new court definitions? I give you a list of examples of what could be taxed from now on:
√ data center servers, coolers and generators;
√ laboratories;
√ radiology equipment;
√ wireless technology equipment;
√ robotization and automation systems, for example in warehouses.
In short, the entire technological backbone of our economy is threatened. Those who have invested heavily in it will be penalized.
For Francois Legault
The Legault government can see in this judgment of the Supreme Court a solution to one of its problems. Cities are looking for new sources of revenue. The mayors made their impatience heard at the last UMQ convention. Here is a windfall that could calm them down.
It would be a serious mistake to think so. François Legault and Pierre Fitzgibbon should, on the contrary, be extremely worried about this judgment. Their government would do well to put itself on the drawing board to rewrite the Act respecting municipal taxation to avoid this unfortunate slippage.
If François Legault wants to stay on course for Quebec to catch up with Ontario in terms of economic growth, punishing technology investments is the worst thing we can do. Quebec is already lagging behind in private business investment, particularly in technology.
Goof
By overtaxing the technological infrastructure, Quebec is shooting itself in the foot in the case of at least three of its major economic challenges.
1. Labor shortage. Faced with the lack of manpower, investment in robotization, automation and artificial intelligence is key. This is how our companies will be able to remain competitive and raise wages.
2. Productivity. This is a major problem that Quebec has been dragging on for a long time and which explains other economic problems such as our lower standard of living. You can’t increase productivity in 2022 without massive investment in technology.
3. Inflation. This tax will hit food and retail warehouses hard, which are and will be increasingly automated. The invoice will necessarily be passed on to the consumer. Same thing with wireless telephony or the health sector. A new source of inflation.
Economic circles understand the counter-productive nature of this new taxation and are rightly crying out for help. Moreover, elected municipal officials, who insisted on playing the green avant-garde at the last UMQ convention, should also think carefully before dipping greedily into this new candy dish.