Quebecers will have an extra $768M this year thanks to cuts

Quebecers will have an extra $768 million in their pockets this year thanks to tax cuts announced in Tuesday’s provincial budget.

Now that Quebec has restored its “economic and financial health,” Finance Minister Carlos Leitão said, the province can afford what he described as “a substantial reduction in income taxes.”

But opposition parties contend the cuts only give back a small portion of the taxes that the Liberals raised over the years.

In his budget, Leitão said a taxpayer living alone with an annual income of $45,000 will save about $255 in taxes this year. For a couple both earning $45,000 per year, the tax cut will amount to about $510, Leitão said.

The reductions will come thanks to two measures.

First, the earlier-than-planned elimination of the health services tax, saving taxpayers a total of $473 million in 2016-17 and 2017-18.

Announced in 2010 by a previous Liberal government, the tax is paid by all Quebecers making more than $18,570 a year.

Successive governments have promised to phase it out or abolish it. Last year, Leitão said it would be eliminated in the 2017 taxation year.

But Quebec has now decided to kill the tax retroactively. The measure, which applies to all but three per cent of Quebec’s highest earners, means those who have just paid it on their 2016 tax forms will get an automatic refund as their tax return is re-assessed.

Those earning between $18,570 and $41,265 will get as much as $50 back. Those in the $41,265$134,095 bracket will get a refund of up to $175. And Quebecers with income between $134,095 and $159,095 will get as much as $200 back.

Taxpayers making more than that will have to wait until they file their 2017 returns to stop paying the health-services tax.

Those whose returns have already been processed will receive refunds by direct deposit or cheque by June 30. Returns processed after Tuesday will be adjusted when they are processed by Revenu Québec.

The other major tax cut for individuals increases the amount of income on which they are not taxed, a measure that will reduce tax revenue by $295 million per year.

Last year, Quebecers started paying taxes on income above $11,635. In 2017-18, Quebec is increasing the no-tax level — known as the basic personal amount — to $14,890.

The change is expected to lead to tax reductions of $55 per taxpayer.

Overall, Leitão said, the tax cuts he has announced since March 2015 will reduce the fiscal burden on Quebecers by a total of $7 billion over six years.

But PQ finance critic Nicolas Marceau said the Liberal government should have used the surplus to reinstate government services it has cut.

Coalition Avenir Québec leader François Legault wanted more of the surplus to go to tax cuts. He estimated previous Liberal tax and fee hikes have amounted to $1,300 per year per family.

“We would have expected that they would have given back this money to these families,” Legault said.

“The real losers of this budget are families.”