The Quebec Budget

Why Should I Care ?

If you live in Quebec, you would be interested in knowing how your taxes are being used. The province has used innovative strategies in the past to develop its economy, such as creating its own pension fund, public auto insurance, Hydro-Québec utility, affordable daycare, and the unique cégep education system. Quebec was also the first province in Canada to impose its citizens.

This lecture has 2 parts

• Revenues
• Expenditures

What is the Quebec Budget?

After an important spending freeze in 2013, 2014, and 2015, the Quebec budget has been balanced since 2015, thanks to increases in revenue. This is mostly due to the betterment of the economy and increases in tax revenue. Of course the 2020-21 COVID-19 pandemic has changed the situation drastically. Thanks to a very tight labour market, the province is hoping to be back on track relatively quickly.

For 2016-2017, Premier Philippe Couillard’s liberal government had a budget surplus. On total revenue of 102.9 billion dollars (B$), the government spent 98.5 B$, including interest charges on the provincial debt. This 4.4 B$ surplus was set aside in two savings accounts: the Generations Fund (2 B$), and the Stabilization reserve (2.4 B$).

Five years later, the overall picture is quite different. The François Legault Coalition avenir Québec (CAQ) government is running a 10 B$ budget deficit on a 130 B$ budget. This is much more manageable than the situation in Ottawa, whose taken the brunt of the fiscal effort in managing the COVID-19 pandemic.

• Revenues

Total revenues stands at 120 B$. The province receives 62.7 percent of its revenue from tax streams, mostly income tax, 25.2 percent from federal transfers, and the remaining from parastatal government enterprises such as Hydro-Québec, Loto-Quebec, the Société des alcools du Québec, Investissement Québec, the Société de l’assurance automobile du Québec, and miscellaneous sources.

Table - Quebec Government Revenues, 2021-2022.

Revenue streams	2021-2022 (M$)	Share of total
Total income tax	50,822	42.2%
Personal income tax	35,216	29.3%
Health Contribution	6,455	5.4%
Corporate income tax	7,985	6.6%
School Property Tax	1,166	1.0%
Total excise taxes/duties	24,700	20.5%
Consumption taxes (incl. QST)	20,322	16.9%
Duties and Permits	4,378	3.6%
Total other revenues	14,506	12.1%
Government Enterprises	3,988	3.3%
Miscellaneous	10,518	8.7%
Total federal transfers	30,274	25.2%
Equalization	13,253	11.0%
Health Transfer	6,799	5.7%
Education and Social Transfer	1,590	1.3%
Other Programs	8,632	7.2%
Total revenues	120,302	100.0%

Source: Quebec Government, http://www.budget.finances.gouv.qc.ca/budget/2021-2022/en/documents/BudgetPlan_2122.pdf

• Expenditures

Quebec’s expenditures rang up at 130 B$, including interest charges on the provincial debt. This is a steady increase on past years, but not as drastic as the situation in Ottawa.

Quebec Government Expenditures	2017-2018 (M$)	Share
Health and Social Services	52,989	40.6%
Education and Culture	27,624	21.2%
Economy and Environment	18,957	14.5%
Support for Individuals and Families	11,417	8.8%
Administration and Justice	11,754	9.0%
Debt Charges	7,665	5.9%
Total	130,406	100.0%

Source: Quebec Government, http://www.budget.finances.gouv.qc.ca/budget/2021-2022/en/documents/BudgetPlan_2122.pdf

Notice that the health and social services account is worth 40.6 percent of the whole budget. Given the aging population in Quebec, health services are expected to grow every year for the next decades. Health expenditures mostly cover the wages of doctors, nurses and civil servants who run the hospitals, clinics and other health care institutions in the province.

A fifth of the sums (21.2 percent) went to Education, which includes primary, secondary, Cégep, and university institutions.

A third (32.3 percent) of the money is spent on the other “missions” of the provincial government such as economic development, environment, transit and transportation infrastructure, support for people (welfare cheques, etc.), and the justice system (police, courthouses, and prisons).

The final accounting line is devoted to interest payments on the public debt (5.9 percent).