PQ Budget: Not bad enough to defeat, not good enough to support

It appears that the Parti Quebecois are taking a slow and steady approach to balancing the Quebec Budget, something that will likely break some of their costlier election promises - not that anyone should be surprised! The budget isn't perfect, and it is bit vague. It is one of those budgets that splits down the middle, in some cases it does the right thing and in others, it is a bit unfair.

PQ Finance Minister Nicolas Marceau said that he didn't want cuts to effect citizens and he expressed his party's view on offloading the burden from lower and middle class families in exchange with an increased burden on the wealthy. In short, this is what the budget did, no more, no less. It contained nothing significant, it didn't start spending like the PQ promised, instead it featured spending caps, cuts and new sources of revenue.

The Good

  • No significant tax hikes on Quebecers
  • Despite breaking the promise about the health tax, most lower-earners should see a $100 tax cut.
  • The PQ are showing some responsibility by trimming around. Deleting 2,000 jobs from Hydro Quebec and capping infrastructure funding should be a good start to teaching discipline and efficiency to those who manage our money - it's been a while since a Quebec government thought of doing such a thing!
  • There are 15,000 new day care spaces to give working parents a hand.
  • The tuition hike was frozen, allowing students to continue to get high standard education at some of the lowest rates in the world. Much of the financial issues within the education system are either non-existent or caused by mismanagement and bribery - something that should be fixed.

The Bad

  • As if our Hydro bills didn't rise enough with Jean Charest's Liberals, the PQ have lifted the cap and are allowing HQ to increase its rates as an index of inflation. While the PQ claim that this approach costs much less than what the liberals would have done, it is still worth noting that HQ is a public-run company and should be subject to a spending review like other programs in Quebec.
  • When you know a government isn't managing funds properly, the last thing you want to see is a tax hike - the income shouldn't matter. Most Quebecers dodged the tax man this time, but those earning more than $100,000 didn't. The PQ mandated that anything above $100,000 should be taxed additionally at a rate of 1.75%. 
    • It is unfair to ask the wealthy, or anyone, to pay higher taxes when the government can and should be looking at programs and cutting waste and things that are unnecessary. 
    • Another reason to oppose a tax hike on the wealthy right now has to do with the fact that they have the resources to set up shop in Quebec and while language laws don't help the situation, at least our tax rates haven't scared all of the wealthy Quebecers (4%) away, yet... 
    • Quebecers need the wealthy to stay, create jobs and pay taxes (even if they pay lower rates) because their contributions are still significant and generate wealth that improves the standard of living of all Quebecers.
    • On the bright side, this hike shouldn't cause too much of a dent in their finances and represents $18 on every $1,000 extra they make or $175 on every $10,000 they make which is meager.
  • Exempting a company from taxes for 10 years on the condition that they donate at least $300 million in a sector of the economy is a give away and won't create the long-term revenue that is needed to sustain our programs and services. For this kind of policy, the PQ would have been better off lowering the corporate tax rate in Quebec and offering grants for those who invested in those specific sectors of Quebec's economy.
  • Specific policy aside, the budget doesn't say much about future plans and doesn't do much to address Quebec's fiscal state.

Overall, the PQ would have been better placed if they opted for more responsible economic policies where efficiency and proper resource allocation would be the priority of the budget. In this case, many of the tax hikes which yield a few million dollars in new revenues would be unnecessary for the many Quebecers who pay enough taxes as it is. While the PQ claim to be taking the burden off of middle class families, there are no real incentives. The middle class didn't get a break, nor did they gain anything. Instead, the PQ opted for a tax on the wealthy which is unjustified and won't do Quebec's economy any good. Hydro prices are set to rise causing Quebecers from far and wide to pay more for the most basic service: electricity - something that is a monopoly in Quebec.

So what should the opposition do? It is clear the opposition will reject the budget and vote against it, and, to avoid an election, have some members abstain or sit it out. However, it is worth noting that despite its grievances it isn't a budget that will cripple Quebec's economy or its citizens' pocketbooks, albeit it won't improve anything either. In short, this budget isn't bad enough to defeat, but isn't good enough to support. Chances are, we won't see the actual plans and actual state of Quebec's economy until Marceau tables his next budget.

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