Montreal, June 12, 2009 – Bill 40 amending the Balanced Budget Act, currently being debated in the National Assembly, is unjustified and opens a Pandora’s box, says Michel Kelly-Gagnon, president and CEO of the Montreal Economic Institute.
Through this amendment, the Quebec government seeks to suspend its obligation to balance its books for the next five years. However, the existing law already contains measures allowing it to run deficits in some special situations, including deterioration in the economic situation.
“The government can even run new deficits during the tax refund period if economic conditions do not improve,” Mr. Kelly-Gagnon stated. “This makes it pointless and even irresponsible to suspend application of the anti-deficit law indefinitely, as the government is currently attempting to do.”
Taxpayers will end up paying more
The Institute has been examining Quebec government finances for several years. A few weeks ago, it published an analysis showing the scope of Quebec’s public debt. It notes, among other things, that Quebec has the highest per capita net debt of the large Canadian provinces.
“Deficits mean deferred taxes, in actual practice,” Mr. Kelly-Gagnon added. “The marginal income tax rate for Quebec residents, combining both levels of government, already stands at 48.2%.”
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and education organization. Through studies and speeches, the MEI contributes to debate on public policy in Quebec and across Canada, suggesting reforms for wealth creation based on market mechanisms.
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Information and interview requests: André Valiquette, Director of communications, Montreal Economic Institute, Tel.: (514) 273-0969 ext.. 2225 / Cell: (514) 574-0969 / E-mail: avaliquette (@iedm.org)