- Quebec estimates that the payment of interest on its debt will cost $9.5 billion this year.
Quebec, March 21, 2023 – The tax cuts announced with the tabling of the provincial budget are good news for Quebecers, concludes the Montreal Economic Institute.
“The high inflation of recent years has hit Quebecers’ wallets hard,” says Renaud Brossard, senior director of communications at the MEI. “The tax reduction announced today will give households a little breathing room, and return some of their lost purchasing power.”
With this budget, Finance Minister Eric Girard announced the reduction of the first two tax brackets by one percentage point each, bringing them down to 14% and 19% respectively.
This represents savings of up to $814 per year for Quebec taxpayers.
Nonetheless, Quebec remains, this year again, the place with the highest tax pressure in North America, according to data from the University of Sherbrooke’s Chaire de recherche en fiscalité et en finances publiques.
The Institute is also concerned about the deficit, given currently high interest rates.
“The government is no longer paying one or two per cent interest on new debt, and it shows in the budget,” says Mr. Brossard. “With the increase in interest rates, it would have been wise for Minister Girard to return to a balanced budget quickly.”
The Quebec government is projecting a shortfall of $4.0 billion for the 2023-2024 fiscal year.
Interest payments on the debt will cost Quebec taxpayers $9.5 billion this year, which is equivalent to all of the income tax paid by 1.5 million average Quebec taxpayers, roughly 84 per cent of the population of the City of Montreal.
The Quebec government does not expect to return to a balanced budget before 2027-2028.
The Institute does take a favourable view of the transition to a patient-based funding model in health care.
“Currently, every patient coming through the doors of a hospital is seen as an expenditure by its managers,” said Brossard. “Patient-based funding means patients would become a source of revenue for our hospitals, changing the incentive structure for their managers. It’s great news for all the patients that have been on a waiting-list for months.”
Patient-based funding consists of compensating health establishments based on the number of medical acts performed within their walls, instead of the old historical-envelope funding model currently in use. This funding model aims to change the incentive structure so that patients are no longer just a cost, but also a source of revenue for health establishments.
Starting in April, the Government of Quebec will expand patient-based funding to surgical activities. It aims to transition all funding for physical health to such a model by 2027-2028.
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The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
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Senior Director, Communications