For all taxpayers, Thursday’s update does not provide for an increase in the tax burden. (Photo: The Canadian Press)
Quebec – In just one year, Quebec’s financial situation has radically changed, to the point of giving free rein to the Legault government, now able to show itself generous to taxpayers, a few months before the election deadline.
Against the backdrop of exceptional economic growth, the economic update that looks like a mini-budget presented Thursday by the Minister of Finance, Eric Girard, aims in particular to counter the effects of inflation, which could reach 4% this year. to maintain the purchasing power of certain taxpayers, primarily low- and middle-income people, as well as seniors.
At the start of 2022, all unattached individuals with an income of less than $ 50,000 will be entitled to a check for $ 275 ($ 400 for a couple), an amount intended to offset the effect of the recent large increase in income. consumer prices. Quebec will set aside $ 739 million next year for this measure, which should target more than 3 million taxpayers. But that only applies for next year and for those eligible for the refundable solidarity tax credit.
In addition to this “exceptional benefit”, 709,000 seniors over 70 will also be entitled to an additional financial boost of $ 400, a measure valued at $ 124 million this year.
For all taxpayers, Thursday’s update does not provide for an increase in the tax burden, so no new tax or tax increase.
In writing his mini-budget, Minister Girard said at a press conference that he had not taken into account the very near election deadline, seeking instead to present a “solid financial framework that inspires confidence in consumers and investors”. He called his forecasts conservative and cautious.
In the short term, the government can afford to show generosity, thanks to exceptional growth in the economy, which is expected to jump 6.5% in 2021, an increase “above global growth”, commented the Minister of Finance.
At the same date last year, Quebec’s deficit reached an all-time high at $ 15 billion. Since then, it has halved, to $ 6.8 billion, when it was forecast last year that it would reach $ 8.3 billion this year.
The return to a balanced budget is still planned for 2027-2028, and no sooner despite the favorable situation because it is important to ensure a “smoother” transition, he argued.
The ratio of gross debt to GDP has fallen to 44.3%, down five points from last year’s forecast. Nominal GDP growth is set at 10.8%.
We knew that the lack of child care spaces was glaring, while the waiting list exceeded 50,000 names. Quebec plans to alleviate the problem by improving the refundable tax credit for childcare expenses in an unsubsidized daycare center. About 385,000 families, whose income is between $ 60,000 and $ 100,000, should be able to benefit from it and ultimately pay a total price comparable to a subsidized childcare service, ie around $ 8.50 per day. This represents a gain of approximately $ 400 per family annually.
The scarcity of labor has become the main obstacle to economic growth, while 200,000 jobs are currently vacant, and Quebec intends to tackle the problem, by focusing on the training and re-qualification of workers in the six sectors. most in demand, including child care, education, health and construction. In this regard, it wants to invest nearly $ 3 billion over the next five years to re-qualify 170,000 workers. A new scholarship program will be designed to attract young people to targeted sectors of activity.
Quebec is practically in a situation of full employment, an “extremely dynamic” labor market, Mr. Girard said, with an unemployment rate forecast of 5.7% expected in December 2021. For one year, 142,100 jobs have been created, while Quebec had lost 123,900 jobs between December 2019 and December 2020, at the start of the pandemic.
Even if the worst seems to be behind us, the pandemic remains a financial issue for the government, which plans to spend $ 3.6 billion in various measures during the year, including $ 134 million to reduce the waiting list in surgery and $ 380 million in staff retention or attraction measures, in addition to nearly $ 2 billion in services to the public and measures intended to ensure the safety of staff.
Cautious in its budget documents, the Ministry of Finance indicates that the evolution of the pandemic “remains a risk for the economic outlook”. In particular, the labor shortage could exert inflationary pressure and slow growth.
The government also promises to return to the charge to convince the federal government to assume a larger share, up to 35%, of total health spending. For Quebec, that would translate into a check for $ 6 billion annually sent by Ottawa.