Tax Bulletin – 2017-2018 Quebec Budget
A Budget Characterized by Prudence and Giving Priority to Services to the Population
Provincial Budget, March 28, 2017
Finance Minister, Carlos Leitão’s, fourth budget remains balanced and focuses primarily on major investments in education, health and public transit.
Tax reduction for individuals
The government announced a reduction of the tax burden on citizens, in particular by accelerating the elimination of the contribution to the health services fund in 2016 for taxpayers earning less than $134,000. Additionally, as of January 1, 2017, the increase in the first income tax bracket exempt from tax to $14,890 will generate a tax reduction benefitting all Quebec taxpayers. This adjustment will reduce the tax burden by about $295M for 2017-2018, representing slightly more than $1.4B over five years.
Health and education at the forefront
It comes as no surprise that the Quebec government announced an increase in health and education investments. In the first strategic sector, health, the government is increasing spending by 4.2% for 2017-2018, which translates into an additional increase of $742M, i.e. a $1.2B increase by 2018-2019.
In education, there will be an additional investment of $3.4B over the next five years. Since educational success is at the heart of this budget, the government is setting aside $1.5B of this amount for higher education.
Public transit has not been ignored in this budget. In addition to investing in three major, job generating, public transit projects (the Réseau électrique métropolitain with an investment of $1.3B, extension of the metro blue line and Québec-Lévis bus rapid transit), the government plans to set aside over $800M to finance public transit for the next five years, including $475M for the Autorité régionale de transport métropolitain and a $333M additional contribution to the operating costs of public transit in every region of Québec.
Jobs and businesses
Businesses need greater means to unlock their full potential and the budget brings a breath of fresh air. Acquiring talent is crucial to support business growth. The government is allocating $289M in additional resources to implement measures aimed at workforce development. Over the next five years, supplementary resources totalling $834M will be allocated to research and innovation, including $118M for the life sciences strategy and an extra $100M for the creation of a scientific and industrial super-cluster devoted to artificial intelligence. The upcoming action plan on entrepreneurship will receive additional credits of $70M and $35M will be allocated to foster entrepreneurship among young people. Lastly, an amount of $200K per year will be invested over two years to support entrepreneurship by immigrants in the regions, a project supported by the Regroupement des jeunes chambres de commerce du Québec.
The government is enhancing two measures supporting business investments, resulting in tax relief of $165M over five years:
- a three-year extension of the tax holiday eligibility period for large investment projects; and
- the introduction of an additional capital cost allowance to support modernization and productivity.
We invite you to read the following pages for more information on the tax measures announced in the 2017-2018, budget.
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