The CAQ promises tax cuts to Quebecers in a context of inflation


While inflation can hurt the wallets of ordinary Quebecers, it’s the opposite for a provincial government that has seen its projected deficit shrink by billions of dollars, according to a report released Monday ahead of the fall election campaign.

The government’s projected finances are “plausible” despite global economic uncertainty threatening to darken the rosy picture, said Auditor General Guylaine Leclerc, who was tasked with reviewing a pre-election financial report from Quebec’s finance minister.

Inflation, Leclerc said, “has a lot to do” with filling government coffers, thanks to increased tax revenue from wages and sales tax.

“At the level of the (fiscal) year 2022-23, at the accounting level, a surplus is expected,” she said at a press conference in Quebec.

Finance Minister Eric Girard’s report, also released on Monday, showed Quebec would end the current fiscal year with an operating surplus of $1.7 billion – the government had projected a deficit of around $3 billion. dollars in the March budget. However, Quebec law stipulates that certain payments must be made to reduce the provincial debt; therefore, the government estimates that it will end the year with a deficit of $729 million.

At a news conference following Leclerc’s report, Girard said Quebec’s economy continued to outperform expectations, and he promised to cut personal income taxes if re-elected the 3rd of October. He said Quebecers have a high tax burden and pay four to five percent. more taxes than other Canadians, on average.

“What we would like to do in a second term would be to reduce the gap between the personal tax burden of Quebecers compared to the rest of North America or Canada,” he said.

Girard said he does not anticipate a recession, but rather a slowdown in growth, to 1.7% in 2023 from 3.4% in 2022. Inflation is estimated at 6.5% for 2022 and at 3.2% the following year, he added.

Revenue from personal income tax – the state’s largest source of revenue – is expected to jump 5.2% from 2021-22 to 2022-23. Consumption tax revenue will total $27.3 billion in 2022-2023, up 10.8% from 2021-2022.

With Girard’s promise to cut income taxes, the Coalition Avenir Québec becomes the third party to promise substantial tax cuts if elected, after the Liberal and Conservative parties in Quebec. Girard did not specify how the province would fund the tax cuts, promising only that it would be done in an “orderly and responsible” manner that would not involve cutting services.

Leclerc, meanwhile, has been tasked with determining whether the government’s financial forecasts, estimates and assumptions made ahead of the October provincial election were realistic. The purpose of Leclerc’s review is to ensure that political parties have accurate information on which to base their platforms and cannot pretend to be surprised by an unexpected deficit or surplus after the election.

Leclerc concluded that the current government’s forecasts for this fiscal year and the next two are “plausible”, but she added that the situation could change due to high levels of uncertainty.

“Spiking inflation, the war in Ukraine and the COVID-19 pandemic are creating a lot of uncertainty, which could cause actual results to differ materially from forecasts,” Leclerc said.

Girard’s report, she said, took into account the latest economic statistics, laws and forecasts, and also included a “margin of prudence,” which Girard said amounted to about $2 billion a year at over the next five years to help cover contingencies.

Leclerc’s main criticism was that the government had not provided an “alternative scenario” detailing what would happen if some of the worst risks materialized, which “would have been helpful”, she said.

Liberal finance critic Carlos Leitão acknowledged that there was “no longer a structural deficit” in Quebec thanks to a sharp increase in revenues, but he criticized the Legault government for not making one. more to help taxpayers cope with the rising cost of living.

Ruba Ghazal, Member of the Legislative Assembly for Québec solidaire, said improved public finances were no reason for the government to boast.

“If public finances are doing well, it’s because life is more expensive for taxpayers,” she said.


– This report from The Canadian Press was first published on August 15, 2022.