Leitão offers austerity and hope in new spending plan
Quebecers will be rewarded with lower taxes, but not quite yet
For his second budget, Carlos Leitão broke with the tradition that a finance minister wears new shoes when he delivers the budget speech, donning the same pair on Thursday that he wore for his first budget last June.
And he repeated a proverb from his native Portugal that he quoted in his first budget speech, which translates as “hope always comes through an open door.”
They represent his two messages to Quebecers on Thursday.
The first is that under the Liberal government, at least, balanced budgets, and austerity in the form of Treasury Board Chair Martin Coiteux’s strict control over spending, will be permanent. It won’t be just “a one- night stand,” as Leitão had said the day before as he showed off his wellbroken- in shoes.
( Is it really austerity, though, when the finance minister announces that the government wants to buy a railway in the electoral swing region of Gaspé and spend $ 3 million to keep it running ?)
The second message is that the reward for this austerity is lower taxes, not immediately, but in time for the next general election, due in 2018.
For the budget year beginning April 1, Leitão was able to announce only that there will be no new increases in taxes and fees.
And Quebecers now paying more for reduced services because of austerity measures the Couillard government had previously announced may not be as excited as the comfortably- shod finance minister that he presented the first balanced Quebec budget in seven years.
But Leitão opened his proverbial door to hope in the political centrepiece of his budget, a five- year “economic plan” promising tax cuts years in advance in some cases.
Buried deeper than usual in the budget documents is a table showing the impact on the government’s finances of the tax reductions for individuals promised in the plan.
The largest one, the gradual elimination of the health “contribution,” wouldn’t come into effect until 2017. In the first budget year after that, 2017- 18, taxpayers would save $ 375.2 million. In the next fiscal year, when the election would be held, that sum would increase to $ 549 million. And the Liberals could promise that in the budget after the election, the saving to taxpayers would increase again, to $ 744 million.
So the finance minister could announce a cut in the health tax in every budget until the election, and the Liberals could then promise another in the campaign. Shoes and a proverb aren’t the only thing Leitão would use more than once.
In all, the finance minister promised a total of more than $ 2 billion in tax cuts for individuals — over the next five budget years, and none in the first one.
Leitão is new to politics, having been elected to the National Assembly for the first time in the general election last April. But he appears to have learned how to read the political calendar, which gives a majority government four years between elections.
And he appears to be fol- lowing a classic strategy: use the first half of a four- year term to adopt unpopular measures, and the second half for popular ones.
For Quebec voters, things are about to get worse before they get better. It’s in the budget year beginning April 1 that they’ll feel the full impact of the austerity measures the government has announced.
That impact will include an escalating confrontation between Coiteux and government employees, including health workers and teachers as well as civil servants, over new labour contracts.
For the Liberals, however, the hope in Leitão’s Portuguese proverb is that by the 2018 election year, the voters will have got used to austerity, and be looking forward to more tax cuts.