In addition to releasing a tax bulletin and press release following the budget lock-up on March 26, 2015, Raymond Chabot Grant Thornton experts briefed various media outlets about the issues that will affect economic and tax considerations in Quebec in the coming years.
Their post-budget comments mainly identify the impacts of the new tax measures on individuals and business managers.
A “good budget” for individuals
Luc Lacombe, Tax Partner, who attended the lock-up in Quebec City in order to quickly and efficiently summarize the key budget measures, explained that this is a good budget for individuals in several interviews on the following radio stations: Radio X (Québec region), 101.5 FM (Sainte-Marie-de-Beauce), 105.5 FM (Chaudière-Appalaches region, 101.9 FM (Victoriaville) and 97.3 FM (Thetford Mines).
In particular, Lacombe was pleased with the announced tax shield that had been recommended in the Godbout Report. It will allow individuals earning less than $50,000 to avoid losing certain tax credits, such as child care expenses or work premiums, should their income increase. “This measure puts an end to an injustice facing individuals who want to work overtime or find new employment […]. It’s an appealing measure that will help the middle class,” he concluded.
Additionally, he believes that the new budget will help seniors. To encourage experienced workers to stay in the work force, the government will increase current tax credits for workers aged 65 and over and will extend the age limit in both directions. Moreover, individuals aged 65 and over who have owned their principal residence for more than 15 years will benefit from a grant in respect of their property taxes.
Tax relief: “Nothing before 2016”
Another key measure for individuals is the abolition of the health tax. “This is good news,” said Jean-François Thuot, Tax Partner, who was also at the lock-up. In a video interview for the Journal de Montréal and the Journal de Québec, which was broadcast on 99.5 FM (Lac-Saint-Jean), he qualified his statement saying, “The bad news is, the measure doesn’t come into effect until 2017.”
Thuot further stated that most tax relief measures for individuals won’t come into effect until 2016. He is nevertheless optimistic about the future, stating, “We’ve achieved a balanced budget, so we can expect good news in the future.”
SMEs also benefit from the budget
In interviews with Radio Canada Première and Radio Canada Estrie, Sarah Phaneuf, Tax Partner, declared that SMEs are the big winners in the 2015-2016 Quebec budget. She went on to say that SMEs will benefit from some tax reductions that bring the corporate rates of Quebec businesses more in line with those of other provinces, in particular, Ontario. “Most Quebec businesses will benefit from tax rates that will be reduced from 11.9% to 11.5% by 2020, in addition to further reductions for manufacturing sector businesses.”
For his part, Éric Dufour, Partner and Vice-President of the Saguenay–Lac-Saint-Jean region, emphasized the importance of new tax measures for inter-generational business transfers in an interview broadcast on Radio X and in an article in Le Quotidien. The government will be putting an end to the tax inequity that made it more advantageous to transfer a personal business to a third party rather than to one’s children.
However, Raymond Chabot Grant Thornton laments the fact that, for the time being, the measure is only available to the primary and manufacturing sector and stated in a press release that the measure should be extended to all sectors.
The firm considers that “the table has been set for wealth creation in two ways: by returning to a balanced budget and by bringing in a breath of fresh air, from a tax perspective, for wealth creators: our dynamic local businesses.” (see the article in Info Dimanche which contains comments by a number of organizations on Quebec Finance Minister Carlos J. Leitão’s budget).
Interesting measures for regional economies
According to Raymond Chabot Grant Thornton’s experts, several measures are beneficial for regional economies.
First, the inter-generational transfers measure, mentioned above, will benefit SME owners in the regions. Éric Dufour also referred to the $1.5B fund being allocated to the maritime strategy that could benefit certain regional projects, such as Arianne Phosphate. He also mentioned the $35M set aside for aluminium processing and the government’s commitment to maintain an investment tax credit at a reduced rate of 8% for five years.
Luc Lacombe noted the manufacturing and processing tax credits that will be extended for several years and, on the infrastructure front, the reconstruction of the Québec City bridge.
Lastly, Sarah Phaneuf noted the 12 cent per liter tax decrease for gasoline retailers in regions bordering the United States. However, she is somewhat skeptical about the impact of this measure. “People don’t necessarily cross the border just to fill their gas tanks,” she mentioned.
An austere budget that raises serious concerns for the education sector
While the budget is not as austere as may have been expected, it does put considerable pressure on spending controls, stated Jean-François Thuot. “In the health and education sectors, it remains to be seen where the cuts will be,” added Luc Lacombe.
Réal Létourneau, Tax Partner and Vice-President of the Eastern Townships region, gave his opinion in an interview in La Tribune. He is concerned about the lack of importance attached to education in the Couillard government’s budget. “You can’t talk about prosperity without believing in knowledge,” he said. He believes that the 2% hike in education spending is insufficient, summarizing: “I’m glad to see that the budget has been balanced, but, I would have preferred to see a 1% increase in the QST, with the proceeds being invested in education”.
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