While Quebec has just lost a major Volkswagen project to Ontario, the Legault government is freeing up hundreds of millions of dollars to improve its chances of success in the future.
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The new measure is included in the 2023-2024 budget unveiled in Quebec on Tuesday and was expected to cost $413 million over five years, including $34 million in the first year.
It takes the form of a tax exemption targeting investment projects in excess of $100 million. Quebec is also investing $40 million in commercial space development.
“In order to accommodate large investment projects in Quebec, particularly in the battery sector, it is important to provide companies with large industrial areas,” the budget states.
This replaces an already existing tax exemption with a new one that can be applied to the critical and strategic sector of mineral extraction, which was not the case previously.
Data centers will also be removed from eligible projects.
“We want to take Quebec to another economic level. The tax aspect is just as much part of our toolbox as direct aid,” commented Finance Minister Eric Girard on Tuesday.
The tax exemption for large investment projects had already cost the Quebec government $140 million in the past five years.
Before the budget was presented on Tuesday, the manufacturing industry, wholesale trade and warehousing were particularly affected.
It is now being extended to new sectors of the economy and also more generous.
Eligible expenses were previously 15%, a level they will maintain in Quebec and Montreal. But they go up to 20% in the regions and even up to 25% in the devital corners of Mauricie or Gaspésie, for example.
Red carpet rolled out
The CAQ government’s goal with this new tax holiday is to attract 100 investment projects of more than $100 million in less than 10 years.
The move comes a week after automaker Volkswagen decided to locate its new battery plant in Ontario.
Quebec is rolling out the red carpet to private companies as it is inundated with project requests. Economy Minister Pierre Fitzgibbon and Hydro-Québec mentioned recently submitted projects requiring 23,000 megawatts.
Mr Fitzgibbon had attributed the loss of Volkswagen to the scarcity of large land and the difficulty of transporting electricity.
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