Legault’s tax cuts to benefit the wealthy, say researchers
QUEBEC - Premier Legault's CAQ government announced in their 2023 budget a new plan to reduce personal income tax rates -- for the third time in five years. The proposed tax cuts will take effect in 2023 and are set to cost the government $1.8 billion per year, adding up to $ 4.1 billion drop in government revenue over the next five years. According to a study by the Institut de recherche et d'informations socioéconomiques (IRIS) – a government funded statistics body - these tax cuts will benefit the wealthiest in the province more than those with lower incomes.
The IRIS study suggests that people earning up to $100,000 annually will receive a tax break of just over $800 per year, whereas those earning $50,000 will only save $328. Essentially, this means that no gain will be made by taxpayers with incomes in the lowest tax bracket, which represents 35% of the Quebec population. Guillaume Hébert, an IRIS researcher and co-author of the study, expressed his concern stating that “these tax cuts will benefit the people who do not need them.
---Lower tax revenue = fewer social services
Hébert’s concern is that the cuts will lower government revenues, money which could be used to provide or strengthen services to the population, especially in health services and education. Quebec’s government has launched a continuous reduction to its own tax revenues over the past two decades, undermining the government's social missions. This is in line with CAQ’s conservative ideology, which favours privatizing health care and educational services.
The recovery of the education system and improving access to health care will require considerable investments in the coming years, and Pierre-Antoine Harvey, another researcher at IRIS and co-author of this report, warned these cuts may have a significant impact.
The Opposition Liberal party has criticized the government’s budgeted health spending as too small of an increase. André Fortin, Pontiac’s MNA and the Opposition Health Critic, stated, “It's going to be increasingly difficult to provide Quebecers with the quality of care they deserve. With such minimal increases in the budget for health care it's going to be very difficult to attract people with the working conditions we can offer." He also noted the importance of improving the solidarity tax credit to help those in the greatest need, adding the budget's projections must be based on realistic economic forecasts, not with rose coloured glasses.
-----Economic slowdown expected
These proposed cuts also come at a time of economic uncertainty, with Quebec possibly facing a major economic slowdown in the coming months. While the peak of inflation appears to be behind us, the Minister of Finance himself has estimated a 50% chance of a recession in 2023. Researcher Hébert warned that “depriving Quebec of significant amounts of money in order to increase the purchasing power of wealthy households is already highly questionable in normal times; with an economic slowdown or even a recession approaching, such a tax cut is clearly irresponsible."