On March 27, the Government of Quebec submitted its 2018-2019 budget. The Chamber applauds this budget, which it believes will strengthen the city’s economy. The health of Quebec’s economy, the continued strength of the job market and the diligence shown by the government over the past few years have made it possible to deliver the fourth balanced budget in a row.
Here is what you should take away from the budget submitted on March 27.
1. The fourth balanced budget in a row
The financial framework of the government’s budget presents a surplus of $904 million before the deposit to the Generations Fund. It reflects the economy’s record performance. With an exceptional 3% GDP growth in 2017, economic predictions remain favourable for the next few years, including a projected growth of 2.1% in 2018 and 1.7% in 2019. The debt/GDP ratio has reached a historic low of 49.6% in 2018-2019, which fits well with the 45% goal for 2023.
The government is still anticipating balanced budgets for the coming years and plans to pay off $10 billion of debt over five years.
In an economy that is going well and where public finances are under control, it is now possible to use part of this greater flexibility that has been created over the past few years to increase spending and reduce the tax burden and the provincial debt. These measures will also help the government maintain its ability to face a recession.
2. Education: a priority of the new budget
The government increased the amount allocated to education by 5%, bringing education spending for this year to $18.9 billion, which is the biggest increase in government spending.
The budget will allocate funds to renovate and improve educational infrastructure at all levels across Quebec, from primary schools to higher education. The government will also invest in a digital action plan for education.
The Chamber believes that treating education as one of the government’s main priorities sends a strong message. Investments in our education system are necessary to succeed in the accelerated transition towards a knowledge economy. The sums announced in the recent budget—aligned with recommendations put forth by the business community—will create solutions to Quebec’s educational challenges and the labour shortage.
3. Beneficial tax measures for SMEs
The 2018 budget provides measures to lighten the tax burden of SMEs.
For example:
- The plan to gradually reduce the premium rate of the Health Services Fund
- The gradual reduction of SMEs’ tax rate from 8% to 4% over five years
- The creation of a reimbursable tax credit to encourage employee training
The Chamber celebrates these measures, which benefit employee training, reduce companies’ operating expenses and encourage our economy’s expansion, growth and productivity. This is excellent news for the city’s economy.
4. Taxing e-commerce
The government is proposing to implement a unique mandatory registration system according to which, beginning in 2019, suppliers outside of Quebec will have to register with Revenu Québec to collect and return QST for the tangible and intangible goods and services they provide to Quebec consumers.
The Chamber congratulates the government for its leadership on this issue. These measures are the start of a solution to the fiscal equality problem arising from unpaid taxes on goods and services transactions.
5. Investments in innovation and artificial intelligence
The government is providing nearly $172 million between now and 2022-2023 to support innovation in Quebec.
This sum will help support innovative projects in Quebec, including the creation of a global artificial intelligence organization in Montréal. An amount of $60 million is also planned for developing AI-powered supply chain projects in Quebec supported by the SCALE.AI super-cluster.
The Chamber is thrilled with these major investments. Montréal is recognized as a world-class higher education hub. These amounts will now contribute to consolidating its position as an innovation hub and reinforce development in this strategic sector in Quebec.
6. Increase in the infrastructure budget
Finally, the government will increase the infrastructure budget to $100 billion. About 30% of this amount will be reserved for Montréal’s infrastructure projects, including the extension of the blue line of the Montréal metro and the extension of Highway 19.
The Chamber welcomes these measures that will help reduce congestion and galvanize the city’s economic activity. It also applauds the government’s approach, perfectly aligned with the Chamber’s, which is to announce and carry out projects in sequence.
Source: Le budget 2018-2019 s'appuie sur la santé économique du Québec et renforce l'économie de la métropole (in french only)