As was widely expected, Quebec Finance Minister Eric Girard made reducing the tax burden of Quebecers one of the priorities of his 2023-2024 budget.
In tabling his fifth budget, Girard cut the tax rate paid by those in the lowest two income brackets by one percentage point each starting in the 2023 tax year. The measure will affect 4.6 million taxpayers, the government said, and be worth up to $814 for a single person and $1,627 for a couple.
“The personal income tax cuts are designed for those who make between $30,000 and $90,000 — those are the ones who pay 36% more income tax than in Ontario,” Girard told reporters.
The tax cut totals $9.2 billion over six years, or $1.7 billion per year, and will be financed largely through a more moderate growth in payments to the Generations Fund, which was created in 2006 to help reduce the government debt.
“At no time and in no way will the reduction in the tax burden of Quebecers be at the expense of Quebec’s public services. Nor do we question the objective of reducing the debt burden and the importance of the Generations Fund,” Girard said at a press briefing.
Quebec is also increasing the maximum age for applying for a retirement pension to 72 from 70 effective January 1, 2024. The adjustment factor is 0.7% per month for those who apply for their pension after age 65.
Contributions to the Quebec Pension Plan (QPP) will also be optional from age 65 onward, as long as the person is receiving the QPP or Canada Pension Plan. This cessation of contributions will apply to both the employee and the employer.
Contributing to the CPP is already optional between ages 65 and 70.
Girard said cutting taxes will delay the government’s goal of reducing the province’s net debt to 30% of GDP. Instead of 10 years it will take 15, he said. The budget projects Quebec’s net debt to rise this fiscal year by $7.6 billion, to $215 billion, representing 37.7% of GDP.
Girard is forecasting that the province’s GDP will rise by 0.6% in 2023, down significantly from the 2.8% growth recorded in 2022.
The budget is projecting a deficit of about $1.6 billion, which rises to about $4 billion after it accounts for legally required payments into the Generations Fund.
Overall spending will rise by 0.7% to $148 billion, including a 7.7% jump to $59 billion for health-care, the largest government expenditure.
Girard said Quebec will return to a balanced budget in 2027-28, adding that if payments to the Generations Fund aren’t considered, the budget would be balanced in the 2025-26 fiscal year.