Quebec’s planned income tax cut divides economists: ‘There’s significant risk’

Quebec is set to deliver the next provincial budget on March 21, and the Legault government seems poised to follow through on  its campaign promise to reduce income taxes.

A few influential economists, however, think it’s a bad idea.

“We don’t think in the present context it’s the best idea,” said Norma Kozhaya, the Quebec Employers’ Council’s chief economist.

The Quebec Employers Council doesn’t like the Coalition Avenir Quebec’s plan to fund the tax cut using the Generations Fund, which is usually used to reduce the province’s debt.

“The negative impact is mainly that we’re not sure we’ll keep reducing our public debt anymore,” Kozhaya told Global News.

In December, the finance ministry revealed the deficit currently sits at $5.2 billion.  The government forecasts it won’t be until 2027-2028 when the budget is finally balanced.

“The point is, yes, to tax cuts, but only when you’re in a financial situation that you can sustainably afford it is the basic message,” said Louis Lévesque of the Quebec Economists Association’s public policy committee.

“We obviously have the inflation situation that is coming down, but it’s not yet under control. There’s significant risk and uncertainty.”

Health-care unions wonder why the government would reduce its revenue when they feel more funding is needed.

“Look at our hospitals, look at our clinics. We really need to put money in there. We need to improve our capacity to attract new workers so we can give more services to the population,” said Pierre-Guy Sylvestre, an economist at the Canadian Union of Public Employees.

The Canadian Taxpayers Federation, however, says with inflation hitting all our wallets, it’s high time for the government to give everyone a break.

“Now would be a great time now more than ever to go for fiscal relief for taxpayers,” said Canadian Taxpayers Federation Quebec Director Nicolas Garneau.

“The real issue is not money, it’s all about the organization,” he said.

Even if some don’t think it’s a good idea, with its strong majority government the CAQ will likely go ahead with the tax cut anyway.