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Quebecers’ tax burden reaches its tipping point

Montreal Economic Institute report says disposable income growth second lowest.

April 14, 2015   by PLANT STAFF

MONTREAL — Quebec income taxes and other levies have become so heavy that they are undermining economic growth and reducing the disposable incomes of Quebecers, according to a Viewpoint on the tax burden of Quebecers by the Montreal Economic Institute.

In 2013, for the first time in 17 years, disposable income has fallen in Quebec, accounting for inflation. Market incomes are stagnating, while income taxes and contributions of all kinds are increasing, explains Youri Chassin, co-author of The Tax Burden and Disposable Income of Quebecers.

This also has an effect on economic growth since the weight of the tax burden reduces the incentive to work and discourages private investment.

The report notes if Quebec had kept pace with the Canadian average between 2003 and 2013, the province’s GDP would be $32 billion higher today. If disposable income had increased at the same rate as the Canadian average, each Quebecer would have an additional $1,680 today.

Chassin stressed the need to reduce Quebecers’ tax burden. “Controlling spending and eventually recording surpluses will allow us to reduce the fiscal burden for Quebec taxpayers and help boost the economy.”

Disposable income growth in Quebec was the second lowest in Canada between 2003 and 2013, while the sums paid by taxpayers to the two levels of government were among the highest as a proportion of disposable income.

“When you look at the provinces with higher disposable income growth, not only are individuals in these provinces less heavily taxed, but they are also less and less dependent on government transfers. Unfortunately, Quebec’s income taxes and contributions are much higher than the Canadian average, and its dependence ratio is rising,” explains
Chassin.

The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization


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