Quebec’s spring budget includes a one-time payment of $ 500 to each adult earning $ 100,000 or less to help offset the impact of inflation, and the cash is scheduled to arrive a few months before the provincial election.
The money will be transferred directly to Quebecers’ bank accounts after filing their 2021 tax returns, Finance Minister Eric Girard said on Tuesday after presenting the budget for fiscal year 2022-23. It’s his fourth and final budget before Quebecers go to the polls in October.
Girard insisted that the payments are not to get the votes and help his government win another mandate, but to help Quebecers cope with significant inflation, which the government expects will reach 4.7 percent by 2022. Around 6, 4 million Quebecers will receive the payment for a total cost of $ 3.2 billion.
“Inflation is unique, so the compensation is unique,” Girard said of the $ 500 payments, adding that his government expects inflation to fall to 2.3 percent in the second half of 2023.
Read more:
Quebec’s Treasury Secretary discusses deficit, economic growth ahead of Tuesday’s budget
The effects of the COVID-19 pandemic, supply chain bottlenecks and the Russian invasion of Ukraine, he added, have helped create a general price increase that has been “higher and more sustainable than originally expected.”
“The rise in gas prices is now; the rise in food prices is now, ”Girard said, justifying the government’s decision to send payments to Quebecers instead of cutting income taxes. It is not appropriate, he added, to lower taxes, “while we have a structural deficit.”
The coalition Avenir Québec’s government budget is projected to run a deficit of $ 6.5 billion this fiscal year – $ 2 billion lower than expected in last spring’s budget. And while the operating deficit is expected to be $ 3 billion, that figure is rising by $ 3.5 billion due to a payment to a fund dedicated to reducing the province’s debt – a transfer required by Quebec law.
Girard says the province is expected to return to balanced budgets by fiscal year 2027-28.
Quebec’s economy has shown a “remarkable” recovery from the pandemic, the finance minister said. GDP grew by 6.3 percent in 2021 after falling by 5.5 percent in 2020. GDP growth is expected to be 2.7 percent in 2022, he said.
The budget comes in the wake of exceptional spending by the government to navigate the COVID-19 pandemic. It estimates that the economic impact of the pandemic on the province will reach a total of $ 18.3 billion in the fiscal year 2024-25.
The budget for the coming fiscal year includes $ 3.7 billion in new spending, with programs aimed at restoring the health system after the pandemic and stimulating economic growth that receives the largest amounts.
Total new program spending is earmarked for $ 22 billion over five years, including $ 8.9 billion for health care, $ 2.8 billion for education programs and $ 4.2 billion for programs to stimulate economic growth.
While Girard painted a rosy picture of the province’s finances, he warned of economic uncertainty surrounding a potential resurgence of COVID-19, further disruption of supply chains and the ongoing Russian invasion of Ukraine.
He said the budget includes “significant unforeseen expenses” totaling $ 8.5 billion over the next five years that could be spent on health or financial expenses.
Quebec is likely to be affected by the war in Europe “to a lesser extent,” according to the budget, because Ukraine accounts for only 0.3 percent of the province’s exports. But the war has helped raise oil and food prices, which will increase existing inflationary pressures.
The government says inflation in the province hit 5.1 percent in January and 5.4 percent in February, which it says justifies direct payments to Quebecers.
‘Quebecers finance these checks themselves’
But opposition parties strongly opposed the decision to redistribute billions to people’s bank accounts, accusing them of trying to win votes.
Liberal finance critic Carlos Leitao said the budget “seems to have been structured to provide a significant payment to over six million Quebecers just in time for the election. There seems to be no vision beyond that.”
He suggested that the government bribe Quebecers with their own money, pointing out that the government collected over $ 3 billion more than expected in income taxes in the fiscal year 2021-22.
“Quebecers fund these checks themselves,” he said.
READ MORE: Quebec Prime Minister says he will address sky-high fuel prices and inflation in the upcoming budget
Quebec solidarity financial critic Ruba Ghazal criticized the government for not acting to stem the “Wild West” with rising house prices, while spokesman Manon Massé said the budget does not do much to address the climate crisis.
The government plans to spend $ 136.6 billion in 2022-2023, as well as an additional $ 2.4 billion planned for COVID-19 support and recovery measures.
Revenue for this fiscal year is estimated at $ 138.5 billion, an increase of 2.2 percent, and Girard has budgeted with spending increases of 6.3 percent and 5.4 percent, respectively, for the health and school systems.
Quebec’s Finance Minister Eric Girard, the center is being applauded by members of the government as he presents the government’s budget.
Jacques Boissinot / The Canadian Press
Quebec’s gross debt, which includes debt in the financial markets and money owed to government officials’ pension plans, is estimated at $ 215.3 billion, or 43.1 percent of GDP.
The province will receive $ 13.7 billion in compensatory payments this fiscal year, an increase of 4.2 percent.
Highlights in the budget
- Quebec adults earning $ 100,000 or less will receive a one-time payment of $ 500 this year to offset the impact of inflation.
- The operating deficit is expected to be $ 3 billion, but that figure rises to a $ 6.5 billion deficit when a $ 3.5 billion payment to a fund dedicated to reducing the province’s debt is taken into account, according to Quebec. the law.
- GDP growth is expected to be 2.7 percent in 2022, after growing by 6.3 percent in 2021 following the first year of the COVID-19 pandemic.
- Revenue for this fiscal year is estimated at $ 138.5 billion, an increase of 2.2 percent.
- Program expenses will amount to $ 128 billion and debt service will be $ 8.8 billion.
- Expenditure on health care and social services will increase by 6.3 percent to $ 54 billion, and expenditure on the school system will increase by 5.4 percent to $ 19 billion.
- COVID-19 support programs will total $ 2.4 billion this fiscal year.
- Quebec’s gross debt will be $ 215.3 billion, or 43.1 percent of GDP.
- Strong economic performance in 2021 led to an adjustment of $ 4 billion more in corporate taxes and an adjustment of $ 3.2 billion more in personal income tax for the fiscal year 2021-22.
- Quebec will receive $ 13.7 billion in compensatory payments this fiscal year, an increase of 4.2 percent.
© 2022 The Canadian Press