Income tax time in Quebec means double the pleasure or pain
It’s a little-known fact that Benjamin Franklin initially penned the famous quote in French. The American Renaissance man used the phrase in a 1789 letter to a French scientist in reference to Franklin’s uncertainty about the durability of the newly signed United States Constitution.
Whatever language it was written in, the message still holds true, although one suspects once artificial intelligence makes human death obsolete, taxes will still be imposed on whatever sentient beings evolve in one form or another.
Yup, it’s tax time, and in Quebec, being a distinct society, the annual rendering unto our contemporary Caesars is double the pleasure or pain for citizens. That is, of course, because Quebec is the only province that collects income tax, in addition to the federal government’s exacting of a pound of fiscal flesh.
This oddity does lead to some understandable confusion for those who have scant interest in or knowledge of the complexities of federal-provincial fiscal arrangements, a group to which your scribe belongs. Most folks, though, do understand that having to file two tax returns does not mean paying double the tax.
How Quebec came to have its own income tax is as exciting a tale as it sounds, except that the premier who pulled it off, that iron-fisted rascal Maurice Duplessis, rarely did anything boring.
As much as one might like to paint le Chef’s intention to give the Quebec government its own direct taxing powers as an affront to federalism, the fact is Quebec was simply taking back constitutionally-granted powers it and the other provinces had temporarily ceded to the federal government during the Second World War.
Seven of the nine provinces (prenewfoundland joining the Canadian club) had separate income tax regimes at the time; Nova Scotia and New Brunswick did not for whatever reason. British Columbia was quick off the hop, bringing it its own income tax in 1876, five years after it joined Confederation.
Quebec didn’t introduce personal income tax until 1939, under Duplessis, but, as circumstances would have it - blame Hitler - the federal government took over the provincial income tax powers with the 1941 Tax Rental Agreement.
After the war, though, only Quebec acted to reclaim its income taxing power and it took much Duplessis arm-twisting and endless meetings and studies before the deal was finally done in March, 1954. Happy 70th birthday, Quebec income tax! Many happy … returns.
The other provinces were content to allow Ottawa to collect taxes because it meant the federal government would use the revenue to address serious imbalances in provincial financing.
Thus was born one of the pillars of the Canadian federal system equalization payments based on a fiscal Three Musketeers code of all for one and one for all. It is so central to the Canadian federation it was enshrined in the Constitution in 1982.
In 2023-24 Quebec received some $14 billion in equalization payments, one of six provinces to get the federal pay-out. The system has come under attack of late from the western provinces who, because of the current structure of the equalization formula, do not get any payments.
Of course, the same provinces did not complain about the formula when they were on the receiving end of the equalization subsidies.
As for Quebec’s separate income tax regime, there are periodic calls to have only one tax return with Quebec collecting for the federal government. Indeed, the Conservative Party supported such a notion in the last federal election. We’re not sure if it is still the official Tory stand.
Prime Minister Justin Trudeau has declared a single income tax system administered by Quebec as a hill too far in the on-going war with Quebec over jurisdiction. There’s just too much of a whiff of building the infrastructure of an independent Quebec to consider such a move.
As Duplessis put it: “The power to tax is the power to govern.”