As the Legault government invests billions upon billions in a variety of businesses, ranging from SMEs to multinationals, through the Department of Commerce and its Economic Development Fund, Investissement Québec and the Caisse de depot et Placement, there is an urgent need to provide financial support to households in Quebec.
It’s bad! Low- and middle-income households are financially strained due to high inflation in energy, food, housing and soaring interest rates. Even households with incomes approaching $100,000 are crying out for help, so concerned are the skyrocketing cost of living.
Should taxes be reduced so that households can face the rising cost of living with more money in their pockets?
Note that several economists object to such a government action. They believe that this will not solve the inflation problem as people will have more money in their pockets to spend. This would fuel inflation further.
I don’t agree with them. The consumer stall risks dragging us into a deep recession. close companies. Increase unemployment and the number of people on welfare.
Instead of allowing Quebec’s economic situation to deteriorate, several proactive measures could be taken to counter the rising cost of living.
INDEXING THE CONTROL TABLES
First of all, I call on the government of François Legault to revise upwards the indexation rate for the current fiscal year 2022. At 2.64%, that indexation rate is almost three times lower than the current inflation hitting the province. This rate of 2.64% was determined on the basis of inflation in the period from 09/30/2020 to 09/30/2021.
We agree that current inflation is unrelated to this period. This indexing rate should be doubled to at least 5.3%. You should know that indexing the tax system has the tangible effect of increasing the level of multiple deductions and tax credits, leaving more money in taxpayers’ pockets.
Of course, I also call on the Justin Trudeau administration to revise upwards the 2.4% indexation rate it set for the federal income tax system in 2022.
If Quebec and Ottawa agreed to double the indexation rate of the tax tables in 2022, it would allow Quebec taxpayers to benefit from at least $1.6 billion more in their pockets.
As François Legault and his Finance Minister Eric Girard begin to consider the possibility of a tax break to help Quebecers offset the rising cost of living, it’s important to remember that this tax measure was previously proposed by Quebec’s leader the Liberal Party, Dominique Anglade.
She proposes a tax break for taxpayers earning less than $92,000 a year. This measure would return $2 billion annually to taxpayers and reduce the burden by about $1,000 per taxpayer. To fund part of that decline, it would raise taxes on the very wealthy.
More specifically, Dominique Anglade would reduce the tax rate by 1.5% for the first two tax brackets ($46,295 and under and over $46,295 and under $92,580). And in return, taxpayers earning more than $300,000 a year would increase their taxes by 2%.
Éric Duhaime’s Conservative Party is also calling for a significant reduction in provincial taxes. In addition to increasing the base tax allowance from $15,728 to $20,000, he proposes reducing the tax rate by 2 percentage points for taxpayers with incomes below $92,580. This is a cut of half a percentage point more than Mrs Anglade’s proposal.
For his part, Paul St-Pierre Plamondon of the Parti Québécois proposes introducing a “purchasing power flat rate”.
The conditions of this special allowance? It would increase to $1,000 for households earning less than $50,000 per year. From $50,000 to $100,000 households would receive $700 and from $100,000 to $120,000 $400.
Single? They would be entitled to $500 if their income is less than $25,000; $350 for those earning between $25,000 and $50,000 and $200 for those earning between $50,000 and $70,000.
To solve the cost of living crisis, Québec Solidaire’s Gabriel Nadeau-Dubois prefers to use what he sees as more structuring measures, such as raising the minimum wage by raising it from $14.25 to $18.00.
To this measure he adds a rental price brake by freezing and the cancellation of the electricity price increase.
In addition, the QS chief would double the solidarity surcharge, which currently stands at $1,055 for a single person.
To ease the wallets of American motorists, who are also victims of rising gasoline prices, President Joe Biden has asked the United States Congress to suspend until September the 18-cent-a-gallon tax on gasoline, the price of which hit $5 this week.
This translates into a 4.75 cent tax reduction per liter at a price of $1.32.
Here in Quebec, a liter of gasoline was trading at $2.10 this week. That included about 60 cents in taxes of all kinds, including 40 cents for Quebec and 20 cents for Ottawa.
If Quebec and Ottawa agreed to cut their taxes by even 10 cents, we would save $1 billion.
But governments should make sure that oil companies don’t hog those 10 cents by increasing their profit margins.
The Parti Québécois is proposing a much more drastic measure: freezing the price at the pump at $1.60 per liter.
We are talking about a reduction of 50 cents per liter that the producers would have to accept.