Quebec Liberals offer big tax cuts with elections less than a year away

Quebecers will be getting $1.2billion worth of additional tax cuts this year thanks to a hefty surplus generated by a healthy economy, the provincial finance minister said Tuesday in an economic update.

With less than a year to go before the next scheduled election,CarlosLeitoannounced annual tax relief that could range from $278 for individuals to $756 for a family of four with a combined income of $88,000.

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The cuts take two forms. One is through a reduction in the lowest tax rate on earned income, which will drop from 16 per cent to 15 per cent in time for tax season. The other is a $100 per child supplement for school supplies.

Together with the elimination of the health contribution contained in the March budget the Liberal government said, all told, it has delivered $2.3 billion in permanent tax cuts over the course of its mandate.

''Tax cuts are intended to give the population some breathing space. It's something we said we would do,"Leitotold reporters in Quebec City.

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Helping to finance the latest round of tax cuts was a $2.4 billion surplus for the 2016-2017 fiscal year $2.1 billion more than initially forecast. That surplus, according toLeito, was driven by stronger than expected economic growth, resulting in higherrevenues.

In the March budget, Leito had projected GDP growth of 1.7 per centin 2017. That figure is now expected to be 2.6per cent, due tohigher household consumption andnon-residential business investment.

''[The economy]is growing at unprecedented levels," said Premier Philippe Couillard. "Quality jobs are being created. That is why there is more money in the government coffers. Quebecers have a right to their share; they will get their share.''

However, a closer examination of the figures released on Tuesday indicates that most of the surplus $1.3 billion worth comes from reductions in program expenditures.

What's behind the surplus

Along with the tax cuts, Leitois using the surplus toreinvest in social services that were subject to harsh belt-tightening measures in the early part of the Liberals' mandate.

Health and education will see their budgets increased by $630 million and $444 million respectively, but those amounts will be stretched over six years.

Those investments, he said, will enable the province to hire500 elementary schoolprofessionals, such as speech therapists.

The money earmarked for the health sector will go to improving residentialcare services for seniors, as well as improving mental health services for vulnerable clienteles.

$25 million a year will be spent informing the public of the risks of cannabis use, in response to the federal legalization coming into effectin July 2018.

"They were acting out of caution when they decided to clean house," said Marie-Soleil Tremblay, accounting professor at the cole Nationale d'Administration Publique."They decided to take everything out, and now they're deciding to put things back in."

Leito, for his part, was unapologetic about having reigned in spending so dramatically in previous budgets.

''I regret nothing because we had to do it,'' he said.

An electoral ploy

The Parti Qubcois's finance critic,Nicolas Marceau, said the tax cuts would do little to compensate for the suffering Quebecers underwentduring the lean years of Couillard's government.

''Quebecers would have preferred better services for the sick and for children, rather than $278 per year," saidMarceau.

The right-of-centre Coalition Avenir Qubec, which has surged in recent opinion polls, welcomed the Liberal government'sdecision to cut taxes, but decried itstiming, coming as it does during an election year.

"My cynicism meter is at 100 per cent today," said the CAQ's finance critic,Franois Bonnardel. He described the tax cuts asthe Liberals ''playing their last card before the election.''

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The Liberals are hoping the economic update will reinforce their claims to be sound managers of the public purse and able stewards of the economy.

The document is sprinkled with claims about their success:201,800 jobs created since 2014, an unemployment rate at a record low, rising wages.

Moreover, the update lands at the end ofseveral difficult weeks for the government. It was forced to backtrack on its promised systemic racism commission;it's been criticizedfrom all sides for its religious neutrality law, and it lost a byelection in a riding once considered a stronghold.

Later this year, the Liberal governmentwill release details of its long-awaited anti-poverty plan another opportunity for it to soften its image ahead of next year's election.