Quebec’s opposition parties are lashing out at the government’s proposal to increase income taxes to make up for restructuring the province's annual health fee.

The Liberal Party and the Coalition Avenir Québec vowed to vote against the motion which the Parti Québécois says is necessary to address the resulting shortfall in the provincial budget.

On Wednesday, PQ Finance Minister Nicolas Marceau announced the flat-rate health tax would be adjusted according to people’s annual earnings, backtracking on a popular campaign promise to abolish the $200 annual fee completely.

Quebec would also hike the income tax rate for people who earn $100,000 and up, he said.

Liberal finance critic Raymond Bachand said the PQ is improvising on its promises.

''This was one of their major campaign promises and today Quebec voters have been betrayed,'' said Bachand, who is also a Liberal leadership candidate.

''I had voters come up to me and tell me they didn't vote for me because of the health tax.''

CAQ leader François Legault said his party would not support the proposed income tax increase.

"It’s not the best time to do so," said Legault. "We are in competition with other provinces so we cannot do what we want. It’s not only a question of equity. It’s a question of competitivity."

PQ announces progressive tax

Abolishing the health tax was one of the PQ’s most popular campaign promises, but Marceau said the his party’s limited power as a minority government is getting in the way.

Throughout the campaign, Marois said the two-year-old health tax unfairly targeted middle-class families.

The new plan announced by Marceau would see people still paying the $200 levy in their income taxes for this year. 

In 2013, the rate would become a sliding scale, with someone earning $18,000 to $42,000 paying between $1 and $199. People with salaries between $42,000 and $130,000 would pay $200 a year. The rate could go as high as $1,000 for people who earn more.

Marceau said the new system will mean four million taxpayers won't pay any health tax whatsoever or will see their contribution reduced as of 2013.

The new measures will kick in for the year 2013 when Quebecers send in their tax returns in the spring of 2014.

Quebec has also decided to not increase the capital gains tax. It has also abandoned plans to reduce a tax credit on dividends.

With files from The Canadian Press