(Quebec) Citizens may suffer from inflation, but for the Quebec government it is in abundance: the deficit of 6.45 billion dollars forecast in the Girard budget last March has practically disappeared thanks to an increase marked by tax revenues, reveals the Treasury Pre-election Report.
Posted at 10:03 am
Charles Lecavalier The Press
According to that report, reviewed by Quebec Auditor General Guylaine Leclerc and presented on Monday, the deficit forecast for 2022-2023 is just 700 million after paying 3.4 billion to the generational fund. And indeed, before that payment, the province will find its way to a balanced budget with a surplus of 1.7 billion, notes Ms Leclerc. This is explained by a significant increase in the state’s own revenues.
In a word, it is abundance. Quebecers will pay $2.3 billion more in taxes than Minister Girard predicted last March. Company: 1 billion. And on the tax side, the state collects 639 million more than expected. Overall, Quebec’s own-source revenue will be $4.7 billion higher. And state-owned companies should bring another $579 million into the treasury.
The Auditor General agrees: This improvement cannot be explained by higher productivity in Quebec companies. Real GDP is weaker in 2020 than Treasury expects. The sharp rise in consolidated government revenue “is mainly due to the impact of rising inflation and the recovery in economic activity,” she says.
Plausible predictions
Since 2015, the Minister of Finance has been responsible for preparing and publishing a report on Quebec’s public finances before each general election. This pre-election report must include an update to Québec’s economic and financial projections as published in the government’s most recent budget. This report is then certified by the Quebec Auditor General.
PHOTO OLIVIER JEAN, LA PRESSE ARCHIVE
Quebecers will pay $2.3 billion more in taxes than Minister Girard predicted last March. Company: 1 billion. And on the tax side, the state collects 639 million more than expected.
In this case, the VG team, which has had the documents since the beginning of June, considers the document to be valid and the forecasts to be fundamentally “plausible”.
It is this document that will serve as the basis for the CFOs of the political parties who will be campaigning in almost two weeks and trying to find a way to fund their campaign promises.
recession risk
But even if the Quebec government does generate much more revenue than expected, that doesn’t mean there aren’t dark clouds. In view of the “very high level of uncertainty about the economic situation”, the AG considers the inclusion of provisions for economic risks of 2 billion in 2023-2024 and 1.85 billion in 2024-2025 in the financial framework to be “relevant”. .
The AG recalled that on July 13, the Bank of Canada had proposed “raising its policy rate by 100 basis points, that inflation may persist longer than expected and that monetary tightening will continue as long as it does not return to its target.” ‘ she remarks.
But if “the economic risks do not materialize”, there is “the possibility that the surplus for purposes of the government’s consolidated financial statements will be higher than expected and that the deficit in the budget balance will improve accordingly”. Without a recession, Quebec’s budget balance could be positive as early as 2023-2024. The VG team found that the term “structural deficit” did not appear in the pre-election report.