What Legault should do instead of sending big cheques to businesses

Tariffs are top of mind these days in Canada, and causing quite a lot of hardship to our workers and businesses alike.

In an attempt to help them weather this trade conflict, Quebec Premier François Legault was quick to announce that his government would implement its usual strategy of sending out big cheques.

Affected businesses could receive up to $50 million in taxpayer-funded loans with generous repayment terms, and further government funding would be made available to productivity-boosting investments.

As you might expect, this is a very costly strategy, especially as we don’t know whether these tariffs are going to be in place for a matter of days or for an entire year. And there are other options Premier Legault should have considered before putting a single taxpayer dollar on the line.

The first has to do with interprovincial trade.

It’s a little-known fact, but it can be harder to sell one’s products in a neighbouring province than to ship them down south to the United States.

Because a web of divergent regulations, goods produced in one province that meet that province’s standards often do not exactly meet those of neighbouring provinces, despite the fact that their fellow Canadians deem them safe.

The same thing occurs with different professional standards, meaning that nurses, dentists, and paramedics trained in one province might not be able to practise their trade in another province without recertification.

On top of all that, there are specific products for which provinces have carve-outs in the Canadian Free Trade Agreement, making it nearly impossible to sell them across provincial boundaries.

In Quebec, the minister responsible for internal trade, Christopher Skeete, has done a good job of explaining how hard getting rid of some of those hurdles can be.

He’s not wrong, but other provinces have shown it’s possible with a bit of political will.

The Quebec Premier’s usual strategy of sending out big cheques, this time to businesses affected by US tariffs, is a very costly one, especially as we don’t know whether these tariffs are going to be in place for a matter of days or for an entire year.

In Nova scotia, Premier Tim Houston has proposed something revolutionary in the form of his Free Trade and Mobility Within Canada Act.

If adopted, Nova Scotia would automatically recognize standards and training, and abolish the interprovincial barriers set out in the Canadian Free Trade Agreement, with any province that adopts similar legislation.

Ontario Premier Doug Ford has already announced his government’s intention to evaluate the adoption of such a bill.

If Quebec were to propose similar legislation, it could join what would become, in essence, a true Canadian free trade area, helping our companies gain market access.

It would be a good step in the right direction toward addressing the province’s costly regulatory environment.

A second approach would be to review the fiscal burden in this province.

It should come as no surprise that Quebec is among the most heavily taxed jurisdictions not just in Canada, but on the continent.

Based on the latest available data, a full 39.7 per cent of the economy is collected by federal, provincial, and municipal taxmen each and every year. That’s a full six percentage points higher than the average in the rest of the country.

When it comes to the taxes corporations pay, whether in the form of corporate income taxes or mandatory payroll contributions such as the health levy, about 6.6 per cent of our GDP is dedicated to covering those.

While that might not seem like much, it remains a little more than 50 per cent higher than the OECD average, and over three times as much as corporations have to pay in the United States.

What this means is that, because of the government’s greed during tax season, our firms have less money to spend to grow their business or reach new markets. By reviewing and lowering taxes, we’d help make Quebec a more attractive place to invest.

These two options might not be as simple and fun as signing a bunch of large novelty cheques but they would be much more useful in helping Quebec’s economy actually face the U.S.’s tariff threats.

Gabriel Giguère est analyste senior en politiques publiques à l’IEDM. Il signe ce texte à titre personnel.