The Government of Quebec has cut income taxes and is reducing debt repayments as it tries to spur economic growth in Canada’s second biggest province.
Quebec Finance Minister Eric Girard’s latest budget reduces the tax rate in the lowest two income brackets and bolsters a tax holiday for companies that make investments in the province of 8.5 million people.
The provincial government said it wants to give Quebec residents more disposable income to spend and attract new infrastructure projects, notably in the electric vehicle sector.
Premier Francois Legault’s government was re-elected last year on promises to attract new investment, protect the French language, and improve the wealth of Quebecers.
The new budget brings Quebec’s personal income taxes closer to neighbouring Ontario’s, but they remain the highest among Canada’s provinces and well above the international average.
The Quebec government said the province will continue to reduce its debt, which is about 37% of the province’s gross domestic product (GDP). The new target is to bring the public debt down to 30% by 2038.
The income tax cuts will reduce provincial tax revenue by $1.7 billion annually. The budget forecasts a deficit of $4 billion for the fiscal year that begins on April 1 of this year, down from $4.6 billion previously.
The Quebec government now forecasts that the budget will be balanced in 2027-28. The government expects economic growth of 0.6% this year, with a 50% chance of a recession.
