Montreal, October 10, 2016 – Thanks to recurring deficits and infrastructure spending, the public sector debt will reach a record $280 billion tomorrow, October 11, a little before 7:00 PM, according to the MEI’s Debt Clock.
“It’s growing rapidly, even though the province has not been in recession for seven years and government revenues keep rising. It’s a worrisome rate of indebtedness that is a cause for concern for all Quebecers,” says Youri Chassin, Research Director at the MEI.
With the public debt going from $221.9 billion to $280 billion in less than seven years, today each Quebecer—man, woman, and child—is saddled with a debt of $33,629, or $69,274 per taxpayer who pays income taxes.
During fiscal year 2016-2017, debt servicing will cost $10.4 billion, money that could have gone to improving schools, hospitals, or any other services for Quebecers. This is more than the government spends on primary and secondary education. This same amount is also equivalent to one third of all personal income taxes.
Debt servicing has not increased much in recent years, however. “The only reason the debt service burden is not exploding is the currently low level of interest rates. But everyone knows that extremely low rates can’t last forever. The government should take advantage of this respite to reduce its debt rather than increasing it,” adds Youri Chassin.
The Quebec Debt Clock shows the growth of the public sector debt in real time. Public sector debt includes the government’s gross debt as well as the debt of the health and social services and education networks, municipalities, and other public corporations for which the government is ultimately responsible. This tool also shows that despite the balancing of the budget, the government is far from reaching zero indebtedness.
“The government’s debt should be a matter of profound concern for Quebecers, who will one day or another have to pay off this debt with additional taxes,” points out Michel Kelly-Gagnon, President and CEO of the MEI. “Workers are already taxed on all sides, and efforts to get our public finances in order must now fall to the government, which must review its spending from top to bottom.”
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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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