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A budget focused on inflation - DFSIN - SFL

A budget focused on inflation

We already knew that inflation, with its impact on household buying power, would be the central concern of the 2022-2023 budget, tabled on March 22 by Quebec’s Finance Minister, Éric Girard. Now we know what measures have resulted, along with many other programs and initiatives proposed by the government.

March 24, 2022

We weren’t mistaken: the increase in the cost of living is at the centre of the Quebec government’s 2022-2023 budget, inspiring a measure that will cost the government some $3.2 billion. This substantial expenditure has been made possible in large part by Quebec’s economic performance, which has increased government revenues and eased the burden of future-year deficits, compared to the forecasts made in last year’s budget.

Bar graph illustrating the Quebec government’s budgetary balance for the fiscal years 2021-2022  to 2026-2027. The graph compares the forecasts from the 2022-2023 budget with those from the 2021-2022 budget. The figures are as follows. For fiscal 2021-2022, the government forecast a deficit of $12.3 billion last year, but the figure is now $7.4 billion. For fiscal 2022-2023, the government forecast a deficit of $8.5 billion last year, but the figure is now $6.5 billion. For fiscal 2023-2024, the government forecast a deficit of $7.0 billion last year, but the figure is now $3.9 billion. For fiscal 2024-2025, the government forecast a deficit of $7.0 billion last year, but the figure is now $3.8 billion. For fiscal 2025-2026, the government forecast a deficit of $7.0 billion last year, but the figure is now $3.0 billion. Lastly, for fiscal 2026-2027, the government forecast a deficit of $6.5 billion last year, but the figure is now $2.8 billion.

That said, what exactly does this inflation-focused measure contain? Here it is in a nutshell, along with six other takeaways from the Girard budget, from a personal finance perspective.

  1. $500 to offset the shock of inflation
    If your net income was $100,000 or less in 2021, you will automatically receive a “one-time cost of living support payment” of $500, tax free, from the Quebec government this year. The government estimates that 6.4 million Quebecers, or 94% of taxpayers, will be eligible for this tax credit, regardless of whether they are students, workers, retirees or beneficiaries of last-resort assistance programs. All that is necessary is to file an income tax return. If your net income was more than $100,000, your one-time cost of living support payment will be reducible at a rate of 10% for every dollar of personal net income exceeding $100,000. That means that a person who earns a net income of $105,000 or more will not benefit from this measure. Note that for low- and middle-income households, this tax credit is in addition to the Extraordinary Cost of Living Allowance of $200 or $275 announced last fall.
  2. Less money for “green” vehicles
    There are few measures in the budget as significant as this one-time amount in terms of their direct effect on personal finances. Nonetheless, if the cost of fuel is prompting you to think about buying an electric or hybrid vehicle, note that the rebates offered through the “Roulez vert” program have been reduced. The new maximum rebates will be $7,000 for a new electric vehicle and $5,000 for a new plug-in hybrid. Previously, the maximum rebate was $8,000. The minister explained that the rebate levels in this program are set in proportion to the cost of the vehicles in question, which has been dropping over the years.
  3. Coping with the effects of COVID-19
    With the number of infections in Europe rising again, the Minister has taken into account the potential continued burden the pandemic might place on the economy and has included a provision of $1.7 billion in 2022-2023. If it becomes necessary, these funds will be used for screening, vaccination, purchase of rapid tests, and funding for additional hospital beds. More immediately, however, if you or a loved one is experiencing symptoms of long COVID, you might be interested to know that the government plans to create 15 clinics to provide specialized care for long-COVID patients. The budget sets out an investment of $20.5 million between now and fiscal 2026-2027. It is estimated that about 9,000 Quebecers are suffering from the long form of COVID-19.
  4. $5.2 billion to “restore” health care
    If you work in health care and are hoping for positive changes from the restoration efforts promised by the government, you may want to note that a significant amount of money – $5.2 billion over five years – has been earmarked for this project. The project is aimed in particular at improving scheduling, ending the abusive imposition of overtime, increasing full-time hospital staff and improving work-family balance. As well, the budget provides $183.3 million over five years, starting with $27.3 million in 2022-2023, notably to facilitate access to a health professional within 36 hours.
  5. A little more help for home care
    If you are in the demographic known as “seniors” or have relatives or loved ones who are, it is worth mentioning this announcement: an enhancement of the refundable tax credit for home-support services for seniors, which will rise from 35% in 2021 to 40% in 2026, increasing by one percentage point per year.
  6. Assistance for higher education
    While not providing a response to the students demanding free university education on the very day the budget was tabled, the minister announced investments of $2.8 billion in education and higher education. Of this amount, $1.3 billion has been allocated between now and 2026-2027 to make higher education more accessible, support students throughout their studies, and increase the number of higher education graduates.
  7. And for businesses?
    On the whole, the 2022-2023 budget is more oriented toward supporting individuals than introducing new measures for businesses. Keep in mind, however, that investments totalling $3.9 billion were announced in last fall’s economic update to stimulate “labour supply” in the context of a labour shortage. As well, if you run a regional business, you may want to take note of the announcement of an envelope of $1.5 billion over six years to contribute to prosperity in the regions. This funding is directed mainly to regional air transportation, land transportation and buying locally.

Obviously, this is just a brief overview of the 2022-2023 budget tabled by the Quebec government. To find out more, consult the documentation published by the Ministère des Finances. You'll find it here (French only).