Montreal, March 16, 2016 – A few days from the provincial budget, the MEI wants to remind the Philippe Couillard government that it made some concrete commitments in terms of public finances which would have positive effects on the economy and on taxpayers’ wallets, and that it should now respect those commitments.
During the election campaign, the Liberal Party made three big promises, spelled out in its election platform:
- The establishment of a “break” on public spending, by which any new spending not planned for in the fiscal framework must be financed by savings in program spending;
- That 50% of budget surpluses predicted as of 2015-2016 be allocated to income tax cuts for middle class taxpayers;
- That the other 50% of budget surpluses predicted as of 2015-2016 be allocated to reducing the weight of the debt through additional payments to the Generations Fund.
Recall that after the first eight months of the current 2015-2016 fiscal year, the government found itself with a budget surplus of some $1.8 billion, taking into account its payment to the Generations Fund ($862 million).
“Quebec taxpayers, who have endured a deluge of taxes and fees of all sorts in recent years, have done more than their share in getting us back to a balanced budget. They now expect the sitting government to act responsibly and honour its commitments in terms of public finances,” says Youri Chassin, Research Director at the MEI.
The MEI points out that reducing taxes promotes economic growth, as numerous university studies have shown. Moreover, an Economic Note published by the MEI last October showed that reducing public spending is less likely to provoke a recession than increasing taxes, and that it ends up having positive effects on economic growth.
“Budgetary discipline was required to restrain the constant rise of public spending. The government has to stay the course and set up mechanisms to make sure that it continues to control spending, like a ‘break,’ a commitment clearly announced by the Liberal Party during the campaign,” adds Michel Kelly-Gagnon, President and CEO of the MEI. “As for potential surpluses, they should be returned to taxpayers or paid into the Generations Fund, as promised.”
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
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