The increase in capital gains tax will reduce the budget deficit from 11 to 10 billion this year, Finance Minister Eric Girard said on Tuesday.
While the opposition accuses the Coalition Avenir Québec (CAQ) of reneging on a commitment not to increase taxes, Mr. Girard explained his choice to imitate the federal government and increase the taxable proportion of the capital gain.
In a parliamentary committee, the minister explained that by harmonizing its tax collection, the government of Quebec will receive an additional sum of 3 billion in five years, including 1 billion starting this year, which will reduce the deficit of 11 billion declared in the budget. Of March.
A larger share of revenues from capital gains tax will thus be received in the current financial year, explained Mr. Girard.
“For us, indeed, the deficit which was forecast at 11 billion risks being around 10 billion,” he said. Obviously, there are other elements that move, but the 3 billion is not distributed equally over time. »
Mr. Girard affirmed that if this prediction comes true, it will no longer be possible to qualify the current shortfall as a “record deficit” for 2024-2025.
Investments
According to Mr. Girard, the decision to maintain a lower rate in Quebec would not have made it possible to attract significant additional investments.
“We would not have generated additional investments compared to other Canadian jurisdictions by maintaining a lower tax rate on capital gains,” he said.
In its budget tabled last week, Ottawa announced an increase in the proportion of capital gains of individuals and corporations that will be exposed to tax, which will increase from 50% to 66% on sums over $250,000. .
In the House, Prime Minister François Legault recalled that previous governments have always followed Ottawa on the capital gains tax.
“Quebec has chosen to harmonize,” he said.
Interim Liberal leader Marc Tanguay reminded Mr. Legault that the National Assembly had adopted, on March 19, a motion against tax increases.
“He is taking advantage of it because he has an 11 billion deficit and he is going to dig into the pockets of thousands of Quebecers,” he said.
Impacts
Earlier in the parliamentary committee, MP Frédéric Beauchemin argued that this decision will have an impact on investments to improve productivity. Mr. Beauchemin asked the minister in vain for analyzes that support his comments.
“There has been no analysis of the Freeland-CAQ tax on productivity,” he lamented.
Mr. Beauchemin also reiterated that savers who were banking on the sale of an income property to ensure their retirement are seeing their plans disrupted by the decisions of Ottawa and Quebec. He gave the example of a citizen in his riding for whom this change causes a loss of $65,000.
“It’s a tax that’s unfair,” he said.
Quebec solidaire MP Haroun Bouazzi affirmed that the impact of this increase is limited since 1% of taxpayers pay 50% of the tax on capital gains.
“Historically, we have always favored the rich and we continue to favor them more, that’s what that means,” he said.
Weight of taxation
The PQ leader, Paul St-Pierre Plamondon, also recalled the recent adoption of a motion against any tax increase.
“We are a little surprised by this decision to increase the tax burden on Quebecers because the federal government has decided to do so,” he said.
Mr. St-Pierre Plamondon, for his part, tried to get Mr. Girard to add exemptions to this increase based on the situation of taxpayers in order to protect small savers.
“It’s not bad public policy, but we’re worried about the middle class,” he said.
The minister took refuge behind the future rules on the federal side without making any commitments on this subject.
“Our goal is to reduce the overall tax burden and that’s what we did,” he said.
According to Mr. Girard, despite the increase in capital gains tax in Quebec, the weight of taxation has increased from 26.1% of gross domestic product to 25.5%, since the election of the Future Coalition. Quebec in 2018.
“What this shows is that the government has reduced the tax burden on Quebecers,” he said.