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.

• Revenues

NEW DATA 

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

Table

Five overall

years Revenuelater, streams the	2016-2017 (M$)	Share of total	Budgeted 2017-2018	Annual Variation
Total income tax	44,849	43.6%	45,306	1.0%
Personal income tax	29,231	28.4%	29,115	-0.4%
Health Contribution	5,969	5.8%	6,049	1.3%
Corporate income tax	7,480	7.3%	7,900	5.6%
School Property Tax	2,169	2.1%	2,242	3.4%
Total excise taxes/duties	22,589	22.0%	24,246	7.3%
Consumption taxes (incl. QST)	19,292	18.7%	20,299	5.2%
Duties and Permits	3,297	3.2%	3,947	19.7%
Total other revenues	15,290	14.9%	14,975	-2.1%
Government Enterprises	4,899	4.8%	4,735	-3.3%
Miscellaneous	10,391	10.1%	10,240	-1.5%
Total Federal Transfers	20,179	19.6%	22,669	12.3%
Equalization	10,030	9.7%	11,081	10.5%
Health Transfer	5,946	5.8%	6,211	4.5%
Education and Social Transfer	1,635	1.6%	1,701	4.0%
Other Programs	2,568	2.5%	3,676	43.1%
Total budgetary revenues	102,907	100.0%	107,196	4.2%

Total revenue stood at 102.9 B$, almost half of whichpicture is collectedquite different. The François Legault Coalition avenir Québec (CAQ) government is running a 10 B$ budget deficit on a 130 B$ budget. This is much more manageable than the situation in Ottawa, whose taken the form of income taxes. Other taxes represent a quarter (22 percent)brunt of the total,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 include the QST,remaining andfrom exciseparastatal taxesgovernment on fuel, cigarettes and alcohol.

Other revenues collected by Quebec City include Government Enterprises,enterprises such as Hydro-Quebec,Québec, Loto-Quebec, the Société des alcools du Québec, Investissement Québec, and the Société de l’assurance automobile du Québec.bec, and miscellaneous sources.

FederalTable Transfers- makeQuebec upGovernment one-fifthRevenues, 2021-2022.

province’srevenue includeEqualization,

Revenue streams	2021-2022 (M$)	Share of thetotal
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 (19.6%),incl. whichQST)	20,322	16.9%
Duties and thePermits	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 andTransfer	6,799	5.7%
Education transfers.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 98.5130 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	Budget 2016-2017	Annual Variation
Health and Social Services	40,240 52,989	39%	38,737	-3,7% 40.6%
Education and Culture	22,572 27,624	22%	21,646	-4,1% 21.2%
Economy and Environment	13,833 18,957	13%	12,338	-10,8% 14.5%
Support for Individuals and Families	10,113 11,417	10%	9,585	-5,2% 8.8%
Administration and Justice	8,059 11,754	8%	6,712	-16,7% 9.0%
Debt Charges	9,237 7,665	5.9%	9,527	3,1%
Total	104,054 130,406	100%	98,545	-5,3% 100.0%

MoreSource: thanQuebec aGovernment, thirdhttp://www.budget.finances.gouv.qc.ca/budget/2021-2022/en/documents/BudgetPlan_2122.pdf

(39

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

A quarterfifth of the sums (2221.2 percent) went to Education, which includes primary, secondary, Cégep, and university institutions.

TheA restthird (32.3 percent) of the money is spent on the other “missions” of the provincial government (21 percent) 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).