2019-2020 Budget: More money for our businesses, but more work needs to be done
According to Finance Minister Éric Girard, the aim of the first CAQ government budget is to invest now to control our future. According to the master of the public purse, the budget was prepared “based on your priorities”.
Thanks to the current fiscal surplus estimated at $2.5B at the end of 2018-2019, the Government is projecting a balanced budget this year as well as for the next four years without need to use the stabilization reserve.
A number of the measures announced are designed to put more money in the pockets of Quebeckers, including the gradual elimination of the childcare contribution and a standardized school tax. Adding to the measures announced in the 2018 fall update (like the new Family Allowance and the new tax credit for seniors) which will give $360M back to taxpayers, the Government will now be putting nearly $1B back in the pockets of Quebeckers starting in 2019-2020.
A boost for businesses but not enough to improve tax competitiveness
To create a more competitive and innovative Quebec, education is the cornerstone. The 5.1% increase in the budget for education and higher education in 2019-2020 would mean an additional $2.4B in resources for education and higher education over five years.
Since the labour shortage is a major issue over the short term, it would have been nice to see measures to speed up worker recruitment. However, we should highlight the announcements aimed at better integrating immigrants into the workforce. With an additional $146M per year over five years, for a total of $730M, the Government wants to implement a new personalized pathway to support immigrants in their integration into Quebec society, including the labour market.
The announcements encouraging workers to stay in the labour market are interesting, including the expansion of the credit for experienced workers and the lowering of the age of eligibility for this tax credit to 60. The reduction in payroll expenses related to wages paid to workers aged 60 and over is also worth mentioning. This reduction would benefit 34,000 Quebec SMEs.
Also, the injection of $75M over six years to support entrepreneurship and encourage the next generation of young entrepreneurs is an interesting announcement to stimulate job creation and entrepreneurial labour, although the amounts could be larger.
Capital and Financing
To stimulate private investment, the government also decided to increase the share capital of Investissement Québec from $4B to $5B in order to be able to carry out more interventions using its own funds. Another measure to be highlighted is the creation of an envelope of up to $1B to support the development of strategic businesses in Quebec and to protect the presence of head offices in Quebec. Given that new technologies are key to productivity and innovation for businesses, the announcement of $329M over six years to accelerate the development and adoption of artificial intelligence by businesses is very good news.
There are no new corporate tax cuts in this budget. In a very competitive business environment, particularly with our neighbours to the south, we have to recognize that this budget gives our businesses more means, but there is still work to be done. The lost tax advantage of Quebec’s economic engines over the Americans must be restored.
For more information on the tax measures announced in the 2019-2020 budget, please consult the document below.