Wednesday, May 2, 2007

Hefty Taxes in Quebec

When the federal budget was revealed on March 19, which means one week before the day of the provincial election in Quebec (March 26), Premier Jean Charest made a promise. He announced that, once elected, he'll use the $700 million coming from federal transfers to lower Quebec's provincial taxes. Obviously, that sum of $700 million will accompany the $250 million that already contributes to assuage Quebeckers' fiscal duties.

However, Mario Dumont, the leader of the Action Démocratique du Québec (ADQ), indicated that his party won't support such an "unbalanced" budget even if he doesn't know what are Jean Charest's budgetary plans. While he promised to act like a sort of Big Brother at the National Assembly, is Dumont really giving a blow to his discourse's coherence?

Not necessarily. Nonetheless, going back into election is not part of Quebeckers' interests. Given Mario Dumont's intentions (which are not subtle), Jean Charest should think twice before lowering our provincial taxes before the beginning of the parliamentary session on May 8.

An imbalance

Despite the necessity, a tax relief of $950 million could look unrealistic in the current political context. Don't forget that Quebec's fiscal and economic policies haven't changed a lot since the last 40 years. Besides, Quebecker taxpayers' wallet is being heavily emptied to keep the so-called "Quebecker Model" alive.

Whether Quebec's hard-core socialists like to hear it or not, a significant tax relief can only be made if our economic and fiscal policies are smartly reformed. Obviously, the Quebecker government must keep social policies that are deemed to be the most useful.

In fact, promising a good hit on the tax burden without making any changes in the way the government sleeps with money is a complete scam. Because of the huge cost of Quebec's heavy social-democracy, many Quebeckers should stop regarding life as a paradise full of free services.

In a scenario with no reforms, the Premier of Quebec (with the possible support of the Parti Québécois) will widen the economic imbalance between this province's revenues and expenses. Indeed, if you spend more than you earn, you'll face a deficit. Expect Quebec's debts to become bigger because of the mismanagement of public funds!

Do Quebeckers want a province that is getting closer to poverty? Let's hope not...

Reforms

By reducing a direct source of revenues (the provincial taxes), where will the provincial government get the money to finance our huge social-democracy? In order to fight the hefty taxes that are inherently related in the concept of welfare-state, Quebec's government must get rid of some of the leftists' sacred cows.

For example, it's about time to have a two-tiers healthcare system. Moreover, we can also add to such a possible reform the increase of Quebec's tuition fees and the end of subsidies to private schools (including ethnic or religious private schools). Unless I'm wrong, low taxes can only make our days when the state has been sized down.

All in all, there's nothing wrong with social-democracy; there's only something wrong when taxes are too big because of the abundance of social policies. Needless to say that in Quebec, some governmental services are either so useless or facing an appointment with a parliamentary make-over.

In short, Mario Dumont is not necessarily wrong when he questions the feasibility of a $950 million tax relief. Still, details really matter. Would Dumont leave aside the parliamentary tradition according to which the Official Opposition votes against the budget? He certainly can't say no to a tax relief that is accompanied by smart economic reforms.

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