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Quebec budget: Tax cuts and productivity should be the priorities

Montreal, March 20, 2019 – With the government enjoying a substantial surplus of between $2 billion and $4.6 billion for the 2018-2019 fiscal year, it should prioritize measures that will stimulate productivity, including tax cuts, says the MEI.

The productivity level in Quebec is more worrisome than ever, according to the latest figures. Quebecers continue to lose ground compared to the rest of Canada and to other industrialized countries. The growth of the standard of living, though, basically stems from the productivity gains of companies.

“The government has to understand that in Quebec, increased productivity requires reductions in public spending. By reducing its expenditures, the government will be able to lower taxes, which will lead to increased investment, both foreign and local,” explains Germain Belzile, Senior Associate Researcher at the MEI.

“At the moment, the Quebec government spends a lot more than the Ontario government, and more than the Canadian provincial average. Yet studies by the OECD, among others, show that economies in which governments intervene and spend the most are also the least dynamic, which is to say those that register the lowest growth rates,” adds Mr. Belzile.

Sound management in recent years has generated surpluses, the economy is relatively healthy, and the unemployment rate is at a historic low. The moment is therefore ripe to address Quebec’s low productivity. “It’s the perfect opportunity to reduce Quebecers’ tax burden. Such an approach would produce much better results in the long term than scattering surpluses left and right to satisfy all the different lobby groups,” concludes Mr. Belzile.

Moreover, as it does each year, the MEI will update its Debt Clock once the budget is officially tabled. Please consult our website for the new data.

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The MEI is an independent public policy think tank. Through its publications and media appearances, the MEI stimulates debate on public policies in Quebec and across Canada by proposing reforms based on market principles and entrepreneurship.

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Interview requests: Pascale Déry, Vice President, Communications and Development, MEI. Tel.: 514-273-0969 ext. 2233 / Cell: 514-502-6757 / Email: pdery@iedm.org


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