Prime Minister François Legault has pledged to deliver a check for a “single amount” to offset the rise in inflation for the current year. In his opinion, this is a means that allows “lower incomes to benefit more than high incomes”. With the approach of the tabling of the budget, Tuesday in Quebec, on what axes can his government act to temper the effects of this increase? A look at five avenues and their effectiveness.
Gasoline
On March 7, Alberta announced that it would remove its provincial gasoline tax of 13 cents per liter next month. The leader of the Conservative Party of Quebec, Éric Duhaime, urged the Legault government to do the same.
However, all the experts with whom The duty discussed agree that it’s a bad idea, starting with the deputy minister at the Department of Finance, Pierre Côté. “People on low incomes consume a lot less gas, so whoever has their Hummer, you benefit a lot. It’s very regressive to do that, we have to act differently, ”he says in an interview. Luc Godbout, director of the Department of Taxation at the University of Sherbrooke, is also firmly opposed to the idea. “It sends the wrong signal environmentally. It rewards those who pollute the most and it does not encourage those who take public transit. The tax expert recalls that the former Minister of Finance Jacques Parizeau had risked in 1983 a reduction – from 40% to 30% – of the fuel tax. Six months later, the situation was clear: “a good part of the tax reduction has not been passed on to consumers,” notes Mr. Godbout.
Mia Homsy, president and CEO of the Institut du Québec, an organization specializing in socio-economic research, adds that the government should target people who “really need it” and “not give it to everyone”. “Those with better incomes are able to absorb the increase. And if they are able to consume less, so much the better. […] In addition, there are many global and international trends” that explain the phenomenon of rising prices, which Quebec “has very little influence on,” adds Benoit Durocher, senior economist at Desjardins.
food
In Quebec, basic food products are exempt from taxes. Earlier this week, the Liberal Party of Quebec suggested pushing the logic further by de-taxing “basic necessities”, including electricity. But such a measure would be more complicated to implement than one might think, says Mia Homsy. The Quebec sales tax being harmonized with the federal tax, it would not be easy to withdraw it “unilaterally”, she argues. And, again, the change would benefit people “who don’t need it,” she adds.
Luc Godbout recalls that in addition to basic groceries, a series of goods, such as diapers and breastfeeding products, are “zero-rated” in Quebec. “And we have the solidarity tax credit [au Québec]then the credit for the goods and services tax, at the federal level, which takes into account the less well-off,” he recalls.
An intervention on food products can be very complex because of the great diversity of products and the fact that prices are dependent on a very large number of factors, continues David Macdonald, economist at the Canadian Center for Policy Alternatives. “There is not much the government can do,” he believes.
Housing
In terms of housing, Québec solidaire recommended in January a freeze in the price of rents. Housing is, along with heating, the aspect over which the government has the most power, argues David Macdonald. In addition to regulating rents, Quebec could tackle real estate speculation by adding taxes on empty apartments and on foreign investment in real estate or impose more certain types of capital gains. “He could change the rules to make it much harder for investors to make money when they speculate,” the expert said.
But still. “Taxing capital gains, taxing “flips”, taxes for foreigners: all that can be done, except that we are in additional receipts”, points out Luc Godbout. “These are not measures to help people, they are measures to raise money. »
Of course, Quebec could create measures that would promote access to housing, says Benoit Durocher. “But I have trouble seeing how we could put in place measures that would lead to a drop in house prices or a slowdown in the rise,” he adds. He notes that a series of attempts in this direction have been made elsewhere in Canada, “with rather limited effects”. “I don’t think it can make a big difference in the underlying trends of the housing market. »
electricity
The debate over inflation and the electricity bill is raging these days. By increasing electricity rates in line with inflation, the CAQ has weakened the wallets of Quebecers, claim the opposition. They all advocate, with the exception of the Conservative Party, a freeze on Hydro-Québec rates.
The fact remains that electricity rates are “extremely low in Quebec,” notes Luc Godbout. And “it benefits everyone if we freeze them, but even more so those who consume a lot of electricity, so heavy users or people who waste, overconsumption”, he underlines.
The tax specialist recalls that the Quebec Taxation Review Commission, of which he was a member, had proposed the addition of a hydroelectricity rate applicable to those who consume more than 100 kilowatt hours (kWh) per day. “The first 30 kWh are at a preferential rate. We were like, why not add one above 100? It would also change behavior. »
Otherwise, rate freezes obviously have a backlash: “What becomes hard is unfreezing,” says Luc Godbout. In the past, such exercises have increased “social tension”, he recalls.
The check
And the famous check for a “single amount” envisaged by the Legault government? It raises the eyebrows of all the experts.
“I’m not convinced that it should be offered to everyone,” launches Luc Godbout. A check, “exceptionally”, nevertheless remains “the least bad thing” to do, according to him, insofar as “it makes it possible to target to whom it is offered”.
Benoit Durocher would also prefer that “aid be more concentrated on households that suffer the greatest consequences of the rise in food and energy prices in their monthly budget”. Targeted aid would also have the advantage of not fueling the inflationary climate. “If we put money back in the pockets of households”large“Well, households are going to have more money to spend, so ultimately it’s going to stimulate demand and exacerbate inflation issues,” he says in summary.
If the objective is to target people with modest incomes, the government should quite simply improve the solidarity credit, raises Mia Homsy. Solidarity Quebec to him too proposed an increase in the amount of this credit, more specifically a doubling for six months and a bonus for people aged 65 and over. “The solidarity credit, that’s its purpose: to mitigate price increases for low-income households,” she says. It’s simple, it’s the best way to quickly reach the people who need it most. »