While the Legault government, through the Ministry of the Economy and its Economic Development Fund, Investissement Québec and the Caisse de depot et placement, is investing billions and billions in a panoply of companies ranging from SMEs to multinationals, there is a urgent need to provide financial assistance to Quebec households.
Things are wrong! Due to high inflation in energy, food, housing, and sharply rising interest rates, low- and middle-income households are taking a financial hit. Even households approaching $100,000 in income are crying out for help, so worried are they about the skyrocketing cost of living.
Should taxes be lowered to allow households to offset rising costs of living by leaving more money in their pockets?
Note that several economists protest against such a move by the government. They feel that this will not solve the problem of inflation as people will have more money in their pockets to spend. This would further inflame inflation.
I do not agree with them. Suffocating consumers risks dragging us into a severe recession. Cause businesses to close. Increase unemployment and the number of beneficiaries of social assistance.
Instead of letting the economic situation deteriorate in Quebec, several proactive measures could be implemented to combat the rising cost of living.
INDEXATION OF TAX TABLES
First of all, I invite the government of François Legault to revise upwards the indexation rate for the current fiscal year 2022. Set at 2.64%, this indexation rate is almost three times lower than the current inflation hitting the province. . This rate of 2.64% was determined based on inflation during the period from September 30, 2020 to September 30, 2021.
We agree that current inflation is unrelated to this period. This indexing rate should at least double to 5.3%. You should know that the indexation of the tax system has the concrete impact of increasing the level of various tax deductions and credits, thus leaving more money in the pocket of taxpayers.
Of course, I also urge the government of Justin Trudeau to revise upwards the 2.4% indexation rate it has set for the federal personal income tax system in 2022.
If Quebec and Ottawa agreed to double the tax table indexing rate in 2022, that would allow Quebec taxpayers to benefit from at least $1.6 billion more in their pockets.
While François Legault and his Finance Minister, Eric Girard, are beginning to consider offering a tax cut to help Quebecers absorb rising costs of living, it is important to remember that this tax measure was previously suggested by the leader of the Liberal Party, Dominique Anglade.
She is proposing a tax cut for taxpayers who earn less than $92,000 a year. This measure would put $2 billion a year back in the pockets of taxpayers, reducing the burden by about $1,000 per taxpayer. To partially finance this decline, he would raise taxes on the very rich.
More specifically, Dominique Anglade would lower the tax rate by 1.5% for the first two tax brackets ($46,295 and below, and above $46,295 and below $92,580). And in return, taxpayers earning more than $300,000 a year would see their taxes increased by 2%.
Éric Duhaime’s Conservative Party is also betting on a marked reduction in provincial taxes. In addition to increasing the basic personal exemption from $15,728 to $20,000, it proposes lowering the tax rate for taxpayers earning less than $92,580 by 2 percentage points. This is a reduction of half a percentage point more than Mrs Anglade’s proposal.
For his part, Paul St-Pierre Plamondon, of the Parti Québécois, proposes establishing an “allocation of purchasing power”.
The terms of this special subsidy? 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 people? They would be entitled to $500 if their income is less than $25,000; $350 if earnings range from $25,000 to $50,000, and $200 for those earning $50,000 to $70,000.
To resolve the cost of living crisis, Gabriel Nadeau-Dubois, from Québec solidaire, prefers to bet on measures that seem more structuring, such as raising the minimum wage, raising it from $14.25 to $18.00 per hour.
To this measure, it adds the control of rents by freezing them and the cancellation of the increase in electricity rates.
Additionally, the QS holder would double the solidarity tax credit, which is currently $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 tax of 18 cents per gallon on gasoline, whose price reached the 5 bucks this week.
Per liter, this is equivalent to reducing the tax by 4.75 cents, on a price of $1.32.
Here in Quebec, a liter of gasoline was trading around $2.10 this week. This 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, it would save us $1 billion.
However, governments must ensure that the oil companies do not pocket those 10 cents by increasing their profit margins.
The Parti Québécois proposes a much more drastic measure, namely to freeze the price at the pump at $1.60 per liter.
We are talking about a cut of 50 cents per liter that producers would have to absorb.
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