Quebec’s economy is faring better and the Quebec government has decided to open the floodgates.
In his fifth budget, the Quebec Finance Minister is focussing on investments in a wide range of economic sectors. However, the current scenario places Quebec in a deficit position for the next two years.
Quebec’s 2018-2019 Economic Plan is casting a wide net, encompassing health, education, public transit, road infrastructures and families. Businesses will also reap benefits. Could the election year have influenced the many investment choices?
Support was expected for SMEs and the budget did not disappoint. Tax relief measures totalling $2.2B will be introduced by 2022-2023 to boost their competitiveness.
Lower payroll taxes
Corporate contribution rates to the Health Services Fund will be reduced, providing SME with $1.2B in savings.
Income tax reduction
An additional positive measure is the gradual decrease of the income tax rate for SMEs in the services and construction industries to 4% by 20222023, with the objective of having these SME eventually benefit from the same rates as SMEs in the primary and manufacturing term. This measure results in a $1B tax reduction.
Additional innovation support
The budget includes support for businesses to foster innovation and help them carve a place for themselves on the international market.
Support of $60M by 2019-2020 has been announced to promote the development of supply chains optimized by artificial intelligence. Additionally, relief totalling $241M has been provided to accelerate business investment in the next five years. These enhancements are the result of increasing the additional capital cost allowance from 35% to 60% and extending it to March 31, 2020 to support the acquisition of cutting-edge technologies. This measure would benefit more than 30,000 businesses investing to improve their productivity.
National labour strategy
Over the next five years, more than $800M will be invested to better support the labour market. Among others, the budget introduces a new tax credit for SMEs if they set aside time for their employees to develop their professional skills. In the coming weeks, the government will be tabling its 20182023 National Workforce Strategy. This national strategy will set aside significant resources to better integrate immigrants in the job market.
Regional economic development
The numerous measures announced include new funds totalling $724M by 2022-2023 for initiatives to be determined that would support economic development in the regions, be it for the forestry sector, mining development, pursuing the maritime strategy or the Plan Nord.
Voluntary disclosure program
The government is announcing a consultation to review the voluntary disclosure program with the potential objective of tightening it up like the federal government did.
For more information on the tax measures announced in the 2018-2019 budget, download the document below.