The government of Quebec released its 2023-2024 provincial budget on March 21st, 2023. Finance Minister Eric Girard and Quebec Premier François Legault expressed that the newest budget is set to reflect the current socio-economic situation.
Overview Of The Quebec 2023 Financial Budget
While some aspects of the budget include financial matters not directly related to citizens. Most of the 2023 budget tries to reduce the financial burden of living in inflationary times.
In overview, the new budget boasts a new senior pension plan and proposes major cuts to the two lowest income tax brackets, which will benefit all Quebecers. The budget fulfills many of the Coalition Avenir Québec (CAQ) election promises from April 2021. Two years later, let’s take a look at how the latest budget may impact you.
Where Your Money Is Going Under The 2023 Quebec Budget
Here is the province’s portfolio.
|Sector||Allocated Funding 2023 – 2024||Allocated Funding 2022 – 2023||Year-Over-Year Change|
|Health & Social Services||$52.9 billion||54.1 billion||-2.22%|
|Education||$27.5 billion||28.4 billion||-3.17%|
|Treasury & Gov. Admin||$11.1 billion||5.9 billion||88.14%|
|Debt Services||$6.4 billion||8.8 billion||-27.27%|
|Families||$3.7 billion||7.9 billion||-53.16%|
|Justice, Public Safety & Security||$3.5 billion||3.8 billion||-7.89%|
|Municipal Affairs & Housing||$3.3 billion||3.8 billion||-13.16%|
|Labour||$4.8 billion||5.2 billion||-7.69%|
|Transportation||$2.1 billion||6.3 billion||-66.67%|
|Environment||$2.0 billion||2.0 billion||0|
|Economy & Finance||$1.9 billion||7.3 billion||-73.97%|
|Agriculture, Fishing & Food||$1.2 billion||1.3 billion||-7.69%|
|Culture, Communications & Language||$1.2 billion||1.7 billion||-29.41%|
|Forestry & Public Parks||$1.1 billion||1.1 billion||0|
|Immigration||$0.8 billion||0.6 billion||33.33%|
|Tourism||$ 0.5 billion||0.6 billion||-16.67%|
Tax Cuts And The 2023 Quebec Budget
Personal income tax in Quebec has long been among the highest taxes in all of Canada. However, the newest budget decreases the bottom two tax brackets. Quebecers will now pay 14 percent on the first $49,275 of their income. 1% Lower than the previous 15%. And for incomes between $49,275 and $98,540, the new tax rate will drop from 20 percent to 19 percent. The other tax brackets will not be altered.
However, every income-earning Quebecer gets the tax break on their first $98,540 earned. The Quebec tax and Canadian tax systems are a set of progressive tiers. You pass through each one the more income you make.
The tax cuts are forecasted to save Quebecors hundreds of dollars, and in turn, will cost the provincial government $9.2 billion in revenue over the next five years. Amid worry that the recent tax cuts may cut government spending, Finance Minister Eric Girard promised that public service needs would still remain a top priority.
Further noting that the tax cut is intended to help citizens with a heavy tax burden and help mend the current state of labour shortages and a possible recession in 2023.
Will Tax Cuts Under The 2023 Budget Help Quebecers?
The provincial government will be making up for the tax cuts by making smaller payments toward the Generations Fund, the province’s debt repayment program.
This means that the province will be meeting its debt reduction target in 15 years, as opposed to 10. However, some economists fear tax cuts will only further burden inflation. Eventually leading to service cuts, by pushing debt onto the younger generation who will have to deal with it down the road.
Montreal’s Executive Committee chair and councillor for the Vieux-Rosemont district, Dominique Ollivier, states that the budget has little to offer for the current housing crisis or for public transportation. This also affects labour shortage issues, of which the largest concern is the lack of nurses in the province.
According to a report by the Ordre des infirmières et infirmiers du Québec (OIIQ), the province needs to hire 10,000 nurses in 2023 to meet the demand for health services. The provincial government previously attempted to recruit international nurses to fill the demand. In February of 2022, immigration minister Jean Boulet announced a $65 million investment over the course of two years to recruit 1,000 international nurses.
How Much Can You Expect To Save With The Recent Tax Cuts
Tax cut savings will depend on the income of the individual. On average, a single Quebecer making $40,000 per year can expect to save about $210. An individual earning $100,000 per year can expect to save around $814.
As for dual-income households. Couples earning a combined $40,000 will save around $56. Couples making $100,000 will save around $656 in taxes, and couples making a combined $200,000 will have a tax cut of roughly $1,627.
You might notice the savings are not large, however, the Quebec government noted that most of the savings and benefits will instead come from the Solidarity Tax Credit.
Pension Plans And Retirement Under The 2023 Quebec Budget
Under the 2023 budget plan, senior citizens living in Quebec can continue receiving the Quebec Pension Plan (QPP) benefits at 60. Changes will be made to the QPP to encourage seniors to stay in the workforce.
Additionally, as of January 1st, 2024, all seniors over 65 will have the option to opt out of QPP contributions, allowing them to keep more of their paycheques. Pension application will also see a change, with the maximum age to apply for pension now set at 72 years old.
Those in the lower tax brackets and those with part-time jobs will also see their benefit contributions lowered. Retirement pensions look at your average earnings over a period of time to calculate what you will get. Those over 65 with reduced earnings do not have to worry that the calculation will take into account their new lower earnings and lower their pension calculation.
Health Care And Financial Aid For Seniors In The 2023 Quebec Budget
Citizens will have $4.7 billion in federal funding for the next five years. However, the federal allocation is billions short of what Premier Legault wanted. Still, the funding will increase the Health Care spending budget in Quebec by nearly $5.6 billion, Girard said.
Quebec plans on using $3 billion to improve health care. A large portion of the funding will also be allocated towards expanding new approaches to health care, as influenced by the Covid-19 pandemic which drastically affected the province.
As a result, Girard stated that Covid-19 vaccinations and testing clinics will become a permanent part of the Quebec healthcare system and hopefully take the strain off hospitals.
The province also aims at allocating $2 billion towards improving the quality of life for seniors and caregivers. Including an increase in the home-support services and access to adapted housing.
The provincial efforts mimic the national Multigenerational Home Renovation Tax Credit. The last financial measure will be applied to all Quebecers, including seniors. With $565 million allocated to vulnerable Quebecers to increase support for mental health services, homelessness and addiction.
Quebec 2023 Economic Outlook
The Quebec government is noting 2023 to be a transitioning year from the pandemic economy to a new one. The 2023 forecast is estimated to have an economic growth of 0.6, with an expected growth of 1.4 percent in 2024. A stark contrast to the six percent growth from 2021 and 2.8 percent in 2022.
And as inflation and interest rates continue to strain consumers, Quebec is expecting households to cut spending in 2023. While businesses may face a slowing demand, higher cost of borrowing and uncertainty. In terms of a recession, the minister of finance predicts a 50-50 chance of one occurring in 2023.
Quebec’s Financial Deficit
Further forecasts in the Quebec 2023 budget is estimating a deficit of $4 billion in the 2023-24 fiscal year, with an additional reduction of $1 billion per year.
In a worst-case scenario, Minister of Finance Girard states that the provincial government will tap into its contingency reserve to return to a balanced budget. However, in the case of a stronger economy, Quebec can reduce its anticipated deficits, returning to a balanced budget before 2027-2028. Quebec’s net debt is currently 37.4 percent of gross domestic product.
A Good Budget For A Bad Situation?
As the cost of living, debt, inflation and interest rates have impacted everyone in the country, the new 2023 Quebec budget is a proactive move to protect and strengthen the economy.
The new budget is not perfect. However, the government is looking at improving the near-term lives of Quebecers facing multiple crises including a possible recession.