Health tax will be phased out in 3 years starting in 2017

The Couillard government shovelled forward its promise to abolish the health tax.

Opposition parties decried Quebec’s decision to phase out the unpopular tax over three years starting Jan. 1, 2017, a year before the next scheduled provincial election.

“It’s not really the budget of 2015, it’s the budget of 2017,” said Coalition Avenir Québec leader François Legault.

“Mr. Couillard promised to do it in his first mandate. He’s broken one of his promises again.”

On the campaign trail last spring, the Liberals promised to eliminate the tax over four years starting in 2016.

In i ts spring budget tabled Thursday, Quebec said scrapping the tax would put $ 1.7 billion into Quebecers’ pockets in five years. The tax ranges from $ 100 for lower income workers to $ 1,000 for those making more than $ 155,000 a year.

In 2012, the Parti Québécois government spared workers making less than $ 15,000 a year from tax.

Then- finance minister Nicolas Marceau said on Thursday he wished he could have scrapped it completely, but his hands were tied.

“We had a minority government and the opposition parties said they would topple us if we went ahead,” he said. “But we still acted right away” by exempting very lowincome workers from the tax, he added.

“This government got elected promising lower taxes, but they govern by increasing them and breaking their promises.”

Quebec will start by eliminating the tax for workers with a net income under $ 42,235 a year. In the first year of the phase- out, 2.1 million taxpayers will be spared from the health tax. Those earning more will have to fork out less on the health tax in the first year, but they will have to wait until 2019 before it disappears from their taxes completely.

Treasury Board President Martin Coiteux said the government is doing exactly what it said it would before the provincial election.

The government’s “rigorous management of expenses” will make up for the billion dollars in revenue Quebec will lose once the tax is gone, he said.

Finance Minister Carlos Leitão said in a news conference that he expects the gradual abolition of the health tax to give a boost to the economy by giving Quebecers more spending money.

The panel of tax experts led by economist Luc Godbout identified the health tax as one of the “incoherencies” in the province’s tax system and recommended eliminating it immediately.

“As the Godbout Commission said, income taxes or taxes on individuals is a very damaging way of taxing and has a negative impact on economic growth,” Leitão said. “If we can offset that and lead to stronger economic growth, then we will see the result of that everywhere.”

If Quebec had got rid of the tax right away, however, the government would have fallen into the red and broken its promise to balance the books this year.

François Saillant of the Front d’action populaire en réaménagement urbain ( FRAPRU), a tenants’ rights organization, isn’t sorry to see the “regressive” health tax go, albeit slowly.

“The health tax hit those with modest income and the middle class particularly hard,” he said.

“This tax never should have existed. It’s the Liberal government that introduced it in 2010, and now they ’re cleaning up after themselves.”