Montreal, November 20, 2017 – A few hours away from the budget update, the MEI salutes Quebec’s decision to reduce the individual income tax—an important electoral promise—and invites the government to turn a deaf ear to the many interest groups that will be demanding even greater public spending increases.
According to reports, the Couillard government is preparing to announce a reduction in the individual tax burden of around $200 per taxpayer. During the April 2014 election campaign, the Liberal Party had promised that half of eventual budget surpluses would be devoted to tax reductions, and the other half to debt reduction through increased payments into the Generations Fund.
“The government must respect its commitment to reduce income taxes, because an electoral promise is a kind of contract with voters, and breaking such contracts encourages voter cynicism,” points out Germain Belzile, Senior Associate Researcher at the MEI.
Since the start of the decade, Quebec taxpayers have been saddled with a panoply of tax increases of all kinds: taxes on alcohol and tobacco, pension plan contributions, taxes on financial institutions (which are ultimately passed on to their clients), tax increases on incomes over $100,000, a new carbon tax, and not one but two provincial sales tax increases.
“During this time, and contrary to popular myth, the government has not gotten smaller,” explains Mr. Belzile. “The government’s mission expenditures, which is to say everything excluding debt service, grew from $84.4 billion in 2013-2014 to nearly $94 billion for the current year, according to projections. In primary and secondary education, for example, spending rose by 14.1% over ten years, taking inflation into account, despite a 6.5% decrease in the number of students. Indeed, all signs indicate that this money is not being spent in the best possible way.”
Furthermore, the MEI points out that the government is not giving taxpayers a “gift” with these tax cuts, as implied by certain statements in the media, since this is taxpayer money to begin with.
“Insinuating that tax cuts are a ‘gift’ from the government amounts to saying that they are something taxpayers do not have a right to, a priori. In fact, this is their money, that they themselves earned and that the government took from them,” concludes Michel Kelly-Gagnon, President and CEO of the MEI. “For the same reasons, it is misleading to say that the government is ‘injecting’ money into personal tax cuts. Such word choices seem innocuous at first glance, but these are loaded terms that can confuse some members of the public.”
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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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