Quebec Liberals Will Stick To Tax Promises

by Mike Godfrey, Tax-News.com, Washington

16 July 2003

The government of Quebec has pledged to follow through on a $1 billion income tax cut next year, despite running a $3 billion deficit, Finance Minister Yves Seguin stated recently.

The recently elected Liberal authority is also planning to implement a larger package of tax cuts over five years that will knock $5 billion off income tax, commencing next year. "Our commitment is clear," remarked Seguin. "The next budget will include the tax reductions to which we are bound."

However, given sluggish economic growth and the large provincial deficit (which has recently been recalculated from $4.3 billion to $3 billion), last month's budget also contained millions of dollars worth of spending cuts necessary to help pay for the tax cuts. "It (slower growth) will lead us to make some different choices, but we will stick to our promises," Seguin commented.

The Liberal Party's fiscal policies have been attacked by the Parti Quebecois, who argue that the tax cuts will de-stabilise the economy and inevitably lead to cuts in education and healthcare spending.

Quebec has one of the highest tax burdens in the whole of North America according to recent reports, and is the only Canadian province that levies its own income tax. The incoming premier of Quebec, Jean Charest, has pledged to reform the province's notoriously complex tax system however, having described it in his recent inaugural speech at the opening of Quebec's 37th legislature as "an obstacle to development" and "a tangle that poisons life for entrepreneurs."

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