A provincial commission has released a report calling for $5.9 billion in personal, corporate and payroll tax cuts in exchange for higher taxes on goods and services.
The commission, chaired by economist Luc Godbout, recommends raising the Quebec Sales Tax (TVQ) to 11 percent, from its current rate of almost 10 percent.
The six volume, 71-recommendation report also recommends raising insurance rates and adding a new tax on domestic electricity consumption. For an average home, the electricity tax rate would cost about an extra $260 per year.
The report recommends taxing books and redistributing that new income to publishers.
Smokers and drivers would see tax rates rise over five years, as taxes on tobacco, alcohol and gas would rise. The gas tax would rise five cents per litre.
The commission would eliminate the health tax, while the annual income tax exemption would rise to $18,000 from $14,281.Five new tax brackets would be created, to reach a total of nine.
Older workers will be given financial incentives to remain in the workplace until a later age.
It is believed that the governing Liberals will be favourable to the recommendations, based on comments top ministers made in Quebec City Wednesday. The government will table its budget in one week.
“I’m very much in favour of reducing personal income taxes and reducing it substantially. That’s my main motivation. I have to finance it somehow, there are several ways of doing that,” Quebec Finance Minister Carlos Leitao said Wednesday.
The opposition parties were quick to slam the proposals.
“We’re open to discussion and debate but there’s some boundaries we won’t cross. We refuse any increase in the provincial tax," said PQ Finance Critic Nicolas Marceau. "We’ve already got the highest sales taxes in North America and raising those will hurt business and consumers.”
CAQ Finance Critic François Bonnardel was also critical. “Quebec is not an isolated island and hiding the Quebec sales tax is not feasible in the North American context, we’ve got to take competition into account.”
The basic personal tax exempt amount would increase from $14,281 to $18,000; overall number of tax brackets would rise from 4 to 9 #Godbout
— Max Harrold (@MHarroldCTV) March 19, 2015
Tax reform commission says it's proposed tax cuts would be at 'zero cost' to govt because of counter measures to hike govt revenues
— Max Harrold (@MHarroldCTV) March 19, 2015
Quebec tax reform commission recommends $5.9B reduction in personal income taxes, corporate taxes and payroll taxes #Godbout
— Max Harrold (@MHarroldCTV) March 19, 2015