Tackling Quebec's tax burden
Paddy Moore, CBC Online News | April 9
With notes from Loreen Pindera

If you ever want to darken a sunny mood in Quebec, just ask people how they feel about the level of taxation in the province.

Quebec is the undisputed taxation champion of North America.  And according to Parti Québécois leader Bernard Landry, the Liberals and their former leader Robert Bourassa are to blame for that title.

Nevertheless, the PQ doesn't seem terribly bothered by the province's tax burden.

Landry is focussing his campaign on responsible government. And one of the reasons he's not eagerly offering tax relief may be that he's also offering up a whole new selection of social programs, including a four-day work week for parents of young children, and measures to offer financial relief to university students and graduates.

"If we to arbitrate between health, education, child care, families and decreased taxes, we will choose services to the population, and when the day will come to decrease taxes, it will be a joy for us. But it won't be possible for two financial years," says Landry.

So the PQ may cut taxes in two years, but not before then. And if Landry does cut taxes then, families would benefit most.

In fact, the PQ has many promises requiring additional money, but has not presented a detailed financial framework for its platform as a whole—something Liberal leader Jean Charest has called for repeatedly.

Polls indicate that, given a choice, Quebecers would choose better health care over tax cuts, which informs part of Landry's logic for his position holding the line on taxes—as long as he does something for health care.

The Liberals are also well aware of those polls, which is why they have made health their top priority, while at the same time promising to cut taxes significantly.

The Liberals say they will cut personal income taxes by 27 per cent over five years, which amounts to $15 billion. This would bring Quebec's tax burden in line with the Canadian average.

The Liberals also want to target low-income and middle class earners with measures such as a tax deduction for employment-related transportation and clothing.

Charest insists his numbers are solid. "It's been tested and tested and re-tested—road tested many times—and every [test] has concluded that our numbers balance and our numbers hold."

ADQ has unique plan


As for the Action Démocratique du Québec party, its tax proposals come with the desire to eliminate the province's soaring $108-billion debt to the tune of $2 billion a year over five years.

Accordingly, ADQ leader Mario Dumont has taken a middle road on tax cuts, from where he views the other parties' tax plans with disdain.

"We think it's not responsible of the PQ to say, 'We'll maintain the taxes at the high level that they are.' But we have an approach that is more responsible than the Liberals. They're putting everything, in the short run, in tax reduction," says Dumont.

The ADQ promises to reduce personal income tax by $4.3 billion over five years. (Dumont has dropped the controversial flat-tax proposal.)

What's most interesting about Dumont's tax blueprint is a promise to change the tax brackets.

Everyone earning less than $54,000 a year would fall into the lowest bracket. Those earning between $54,000 and $80,000 would be taxed at 20 per cent. Above that, the tax rate would be 23 per cent.

The question about the change in tax brackets is whether an ADQ government would also change the rate at which supplements, such as family allowance, are clawed back.

The clawback


Accounting professor Claude Laferrière, who teaches at l'Université du Québec à Montréal and has studied Quebec's tax system in detail, says Quebec already claws back its handouts at a low income level.

"In Quebec, for a single parent family, they give family allowances. But it starts to be reduced at $16,000.  We're not talking about a rich person!" says Laferrière.

Such giving with one hand while the other takes away is, he says, where the true injustice of the system lies; it's something none of the parties is addressing, because they cannot afford to do so.

"[Politicians] want to show they are generous, but they don't really have the money. So they start to take back that money at a very, very low level. And the rates of reduction of the allowances, if your income is increasing, are very, very high."

Laferrière also has some interesting findings about Quebec's $5-a-day day care system. He's found that things are not always as they seem.

The popular program actually penalizes families earning less than $42,000 a year, Laferrière maintains.

He says, a single mother of two earning $35,000 would come out $1,400 ahead if she opted out of the $5-a-day program, paid $26 a day for each child, and then applied that money to tax credits available from both the Quebec and federal governments.

Laferrière also has questions about the Liberal promises, which have largely been proposed for families who need them most. In the fine print of the Liberal policy on day care, it says high-income families would be taxed on part of the child-care subsidy received for $5-a-day day care.

The questions this raises for Laferrière are: How much of the subsidy would be taxed, and what is the threshold at which a family becomes labelled "high income?"


And when all the campaign speeches are complete, some Quebecers may still be asking: Can the parties improve health and education, while at the same time delivering tax relief?