“I’m so tired of being ‘poor’ that it’s impossible. I put poor in quotes because I am middle class. But I’m no longer able to be tight every month. I am a teacher and my partner is in construction. We have normal salaries. »
Published at 6:30 a.m.
Launching her heartfelt cry in a personal finance group on Facebook, the woman was looking for budget balancing tips. Wisely, we suggested that he draw up a list of all his expenses, to become aware of them, and then make cuts in what seems superfluous.
This is a good first step towards budgetary rigor. It works for families, businesses and government.
Quebec is engaging in this tedious exercise to reduce its enormous deficit of 11 billion in anticipation of the budget update which will take place this Thursday. A little Saturday morning cleaning affecting only five tax credits would save 1.2 billion, calculates the Research Chair in Taxation and Public Finance at the University of Sherbrooke. My colleague Francis Vailles has written on the subject1.
In fact, we could do a much more vigorous cleaning that reaches into all the nooks and crannies. In all, around a hundred tax credits deserve to be scrutinized, or even thrown out, according to the experts from the Chair led by Professor Luc Godbout.
The problem, and it’s a big one, is that it is never easy or politically profitable to take away achievements from anyone. Even if everyone agrees on the need to reduce expenses. Imagine the dilemmas your family experiences when choosing between a bottle of wine or a Lego set, and multiply them by 9 million.
Take the case of the Supplement for the purchase of school supplies. At the beginning of July, Retraite Québec paid $121 to all children aged 4 to 16. Regardless of their income, all parents received it. Cost of the operation: 141.5 million.
We could certainly adjust the amount according to income, as we do for the Family Allowance, or cancel it after a certain level. For the couple who earns $200,000 a year, these $121 added to the budget go unnoticed, while they make a huge difference for the parents who are struggling. The regressive amounts complicate things a little for everyone, but it can be done.
Let’s move on to the RESP, the registered education savings plan. Contributions entitle you to two grants, one from Ottawa, the other from Quebec. A very little known fact, “Quebec is the only province to offer an incentive,” underlines Luc Godbout.
The strategy has been remarkably effective over the years in convincing parents to save for their children’s education. In 2000, Quebec had the lowest participation rate in the country (14%). Today, it is quite the opposite, with a rate of 60.8%.
The richest families get exactly the same subsidy as those in the middle class. We could distribute the money differently and ensure that from a certain income, the subsidy drops to zero. The two scenarios proposed by the Chair provide a saving of 30 million per year. Will this have an impact on the educational careers of young people whose RESP will thus find itself a little less full? This is not an issue in other provinces.
As for the credits offered to seniors, the one for home support completely misses the target. It was supposed to help people with low incomes, but in reality it is the wealthy who pay for services (meals, cleaning) which entitle them to tax refunds, reveals the Chair’s analysis. Logical, when you think about it.
One thing leading to another, the measure has continued to be more generous, so much so that the total bill has increased since the year 2000 from 2 to 752 million (evaluation for 2024). If the trend continues, with the aging of the population, we will cross the billion mark with credit that does not help the right people. Do we really want to maintain the status quo?
The Chair proposes to extend the eligibility age from 70 to 75, one year at a time so that no beneficiary loses their credit along the way. With advances in medicine, the vast majority of Quebecers are able to stay in their home until age 75 without having to resort to paid services. We would also save by adjusting the generosity of credit according to income.
We could go on like this for pages and pages.
If Quebec cuts its credits, the reaction, although legitimate, is very predictable.
Retirees will say that they have paid taxes all their lives and that they deserve to get some of it back. They will add that it is more advantageous for Quebec to encourage them to stay at home and that their purchasing power must be protected since their income is “fixed”.
The richest will complain that they still have to pay more for others, that they pay more tax than anyone else, but receive nothing more in return.
Parents of young children will argue that it is beneficial for the government to subsidize child care costs since it allows them to stay in the workforce and pay taxes. They will also remind us that public school must be free. Parents of older children will say that in their time, they paid 100% of daycare out of their own pocket.
Couples who plan to start a family will argue that society must support their noble adoption project or their infertility treatments, because neither is cheap and these future children will contribute financially to the society.
In short, everyone believes they deserve a helping hand from the State. But when we’re facing a record deficit and we have to cut spending, what do we do?
The easy answer always contains the words “efficiency”, “fat” or “waste”. However, nurses will tell you that they are already ultra-efficient. Teachers swear that schools make miracles out of nothing. In the ministries, we no longer have the right to hire new staff, no Quebecer wants to suffer a reduction in services and the opposition misses no opportunity to criticize.
So… what do we do? Do we ask for advice on Facebook?
1. Read the column “A small household would easily bring in 1.2 billion”
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