Why Quebecers are the only Canadians who don't want tax cuts

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Osprey, Saturday, June 2, 2007

How does one explain that only 27 per cent of Quebecers were in favour of a tax cut in the Charest government's budget, while 70 per cent of them were against it, according to a Leger Marketing poll?

How does one explain that the minority government almost fell over a tax cut?

Only in Quebec, you ask? Most definitely. Are Quebecers, as columnist Alain Dubuc wonders, the only "impophiles" on the planet, a people who love to pay taxes?

The explanation is actually quite simple.

Only 27 per cent of Quebecers favour a tax cut because 42 per cent of Quebecers don't pay any income taxes at all. Either they live below the poverty line or they make less than $25,000 a year, where the provincial tax rolls begin.

Since they don't pay any taxes, they are not invested, either emotionally or financially, in a tax cut. Of course, as they told the pollster, they would rather have more services, services for which they pay only as consumers through the 7.5 per cent Quebec sales tax.

Altogether, it's a telling comment on Quebec as a have-not province, as well as on its culture of entitlement. If this is the famous Quebec model, it is either broken or badly in need of fixing.

This is a province where day care that costs $48 a day is available to parents for $7 a day. It's a province where university tuition has been frozen since 1994 at $1,668 a year for resident undergraduate students - about one-third of what it costs Ontario kids to attend Montreal's McGill University. Yet when Premier Jean Charest promised to end the freeze and allow tuition costs to rise by a paltry $100 a year over the next five years, it became a major issue in the recent provincial election campaign. And in spite of the tuition freeze, Quebecers have the lowest university enrolment rates in the country, while Nova Scotia, with the highest tuition costs, has the highest level of enrolment.

These entitlements - cheap day care and university fees - aren't remotely available anywhere else in Canada. Thus Quebec, with only 20 per cent of the pre-school age kids in the country, has about 50 per cent of all the day-care spaces. Quebec university students and their families pay only 10 per cent of the cost of their education.

These cheap services, and others, simply aren't sustainable in a province where the public debt is 42 per cent of gross domestic product, and where the budget is in balance only because of dividends from Hydro-Quebec, Loto-Quebec and the Quebec Liquor Corporation, to say nothing of the $2.2 billion of new equalization money flowing from Ottawa in Prime Minister Stephen Harper's bid to resolve the fiscal imbalance with the provinces.

And there's the rub in the rest of Canada. When Charest made a campaign promise of a $950-million tax cut, $700 million of it in fiscal imbalance money, he triggered a big backlash in the rest of Canada. In the final days of the March campaign, it only reminded Quebecers of his broken tax cut promise of $1 billion a year in his first term. For Harper, who had no advance warning of Charest's tax cut promise, it created a political problem in the rest of the country.

While there is no constitutional issue with using transfer payments to equalize taxes as well as services, the political appearances were extremely problematic. To all appearances, rather than bribing the voters with their own money, Charest was bribing them with other people's money, a novel concept, and, in English-speaking Canada, an entirely unwelcome one.

Yet he is correct on the principle of a middle-class tax cut. Quebecers are the most heavily burdened taxpayers in the country. As Tasha Kheiriddin, former executive vice president of the Montreal Economic Institute, noted in La Presse this week, "Each year, the Fraser Institute calculates 'Tax Freedom Day,' which is to say, the day of the year you have to work until your taxes are paid. In Quebec, in 2006, this day fell on June 27, later than anywhere else in Canada."

But tax cuts? Not for Quebecers. Proof positive that we are indeed, as someone suggested this week, a distinct society.

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