Wednesday, March 31, 2010

Spend and Tax

Yesterday's Quebec budget was one of the most toxic I've ever seen. Among the highlights:

-Health Care taxes and user fees
-A pair of 1% increases to the provincial sales tax
-An increase to the fuel tax

Ouch.

Those can't have been easy decisions to make, but given the debt load facing the province and a stubborn desire to not cut services, they were necessary.

There's a belief that any government who dares raise taxes will be hoisted upon their own petards and run out of town. Because of that, watching how this budget is received will be make for a fascinating case study.

10 Comments:

  • It's the only thing left to do, when a Federal Conservative "government" manages to translate a $25 Billion Surplus into a $58 Billion dollar (and growing) DEFICIT. All provinces will have to tighten belts - and Harper will too, eventually...

    By Blogger WesternGrit, at 6:41 PM  

  • Toxic is a bad choice of words. The PQ has been reduces to saying that the problem is that Charest won't spend the money properly.

    When a right leaning leader poses what amounts to new taxes and says that this is so that services don't get cut, a left leaning opposition doesn't have lots of room to fight. Much like 5 years ago when the Liberals cut spending federally. It's hard for a right leaning opposition to argue (except to say that they didn't go far enough)

    In my mind, the actual question is whether or not this is the start of an adult conversation on taxation levels and quality of services in Canada or if it ends up being a simple one off event.

    By Blogger Dilip Andrade, at 7:00 PM  

  • Let's not forget that Martin threatened to cut funding to provinces that proposed this.It was against the law according to Liberals.

    By Anonymous Anonymous, at 7:15 PM  

  • The day of reckoning for Quebec, has been coming for a long time.

    They have a hugh, debt and deficit problem.

    Maybe sovereignty, can now be shelved for the nonsense that it is.

    How will Quebec ever be able to survive as an independent country, without equalization, from ROC.

    If I lived there I think I would be as mad as hell, and would probably move.

    By Anonymous Anonymous, at 8:18 PM  

  • Now that Ontario can no longer carry Quebec's debt load, the time has come to pay the piper his due.

    By Blogger Paul, at 9:49 PM  

  • Now those are some silly comments. Yes, taxes have to go up - but why? Because Charest has cut them by $5.4 Billion while in office. He cut progressive income taxes. Now he's imposing $4.4 Billion in regressive taxes to compensate for his screw-ups (remember the "fiscal imbalance" dividend, claimed because of underfunded services, that was immediately used to cut taxes?). TVQ & Hydro OK, there are progressive compensatory mechanisms in place, and those are smart taxes. But the health taxes are some of the stupidest I've ever seen. McGuinty made his progressive - not Charest. And the user fee is not just regressive, hitting the poor more, and the frequently sick (which the poor are more, so a double whammy for them), it's also terribly counterproductive, everywhere it's been tried: doesn't affect behaviour of the rich, but does discourage the poor from using services, leading to waiting to use services, things getting worse, and eventual treatment, being more extreme, costing more than if used earlier.

    Castonguay was quietly critical on Radio-Canada tonight. I figure they're going to have amend the budget, to bring in some progressive compensatory tax credits/rebates.

    Cutting progressive taxes, and replacing them with regressive taxes, disproportionately shifting burden from upper-middle class and rich to, in ascending order of burden, middle middle, lower-middle, and lower classes? Atrocious.

    Having made foolishly unsustainable cuts in income & corporate taxes, as this budget effectively recognises, Charest is unwilling to recognise his mistake, so he's shifting the whole burden onto regressive consumption taxes of every kind, some which make sense, many that don't. Idiocy. Straight out of Republican & Conservative playbook - see what RNC have done in States, and Harris et.al. here.

    I know there is some anti-QC resentment out there on fiscal issues, but that is no reason to cheer bad fiscal policy, because it will spread, and hurt everyone.

    This guy has a good summary of the problems:
    http://rppe.wordpress.com/2010/03/31/quebec-budget-packed-with-regression-and-a-zombie/

    As does this guy, though I despise him:
    http://www2.lactualite.com/jean-francois-lisee/budget-charest-et-le-pot-au-lait/2706/

    By Blogger Eugene Forsey Liberal, at 10:34 PM  

  • Honest question, any thinking about a Carbon Tax in Quebec?

    By Anonymous LC, at 3:06 AM  

  • LC - I believe Quebec already has a very mild carbon tax.

    And good points by Eugene and Dilip - this comes after large tax cuts earlier in Charest's reign and he certainly has more leeway to do it, coming from the right.

    By Blogger calgarygrit, at 9:24 AM  

  • In fairness, anyone or any company with the means to leave the province already has. Increase the taxes all you want - it'll discourage people from coming back, but it won't chase anyone away.

    By Blogger Robert Vollman, at 10:13 AM  

  • "I believe Quebec already has a very mild carbon tax.

    Uhhhh .... sure.

    Everywhere else it's just called a gasoline tax. But in Quebec, it's called a Carbon tax. Sells better to the environmental lobby that way, I guess.

    By Blogger Paul, at 8:37 PM  

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