Be aware that despite the provincial tax cuts offered by the Legault government, we will still pay a tax burden (federal and provincial) in 2023 that is significantly higher than Ontario’s.
The CAQ government reduced the tax rate of the first two tax brackets by one percentage point, from 15% to 14% for the bracket up to $49,275 and from 20% to 19% for the next bracket, bringing it to $98,540.
Yes, there is some pent-up demand for Ontarians, but the gap remains very large, amounting to up to 25% more taxes for middle-class taxpayers in Quebec.
This additional tax that we have to pay goes exclusively to the coffers of the Quebec government.
Compared to Ontario taxpayers, here is the amount of additional taxes (in dollars and percentages) that Quebecers will have to pay this year depending on their respective taxable income bracket (after basic personal credit, indexation and provincial reduction of federal tax in the case of Quebec). ).
- Income of $30,000: +$507 (+16.0%)
- Income of $40,000: +$1154 (+22.3%)
- Income of $50,000: +$1808 (+25.1%)
- Income of $60,000: +$2485 (+24.9%)
- Income of $70,000: +$3,132 (+24.2%)
- Income of $80,000: +$3779 (+23.7%)
- Income of $90,000: +$4,364 (+23.0%)
- Income of $100,000: +$4,864 (+22.0%)
- Income of $150,000: +$6,687 (+15.4%)
- Income of $200,000: +$7743 (+11.6%)
Only for low-income taxpayers, meaning those with taxable income of less than $22,000, do Quebecers pay slightly less in taxes than Ontario residents.
Note that my calculations are based on Quebec and Ontario tax tables prepared by accounting firm Raymond Chabot Grant Thornton.
STANDARD OF LIVING
Finance Minister Eric Girard did not miss a beat in praising the narrowing of the wealth gap between Ontario and Quebec that has occurred since the CAQ came to power. By prosperity here we mean real GDP per capita.
The Legault government’s big financier therefore used “his” recent budget update to remind us that the gap in living standards between Quebecers and Ontarians had shrunk from 16.1% in 2018 to 13.5% in 2022. And if the trend continues, Minister Girard predicts that the gap will fall to 13.1% in 2023 and 12.3% in 2024.
The minister specifically emphasized that under the previous Liberal government of Philippe Couillard from 2015 to 2018, the average annual growth in our standard of living (+1.3%) was slightly lower than that of Ontarians (+1.4%).
Between 2019 and 2022, under the current CAQ government, the increase in living standards in Quebec continued at an annual rate of +0.7%, while in Ontario we saw real GDP per capita growth of just +0.7 % limited to standstill or almost standstill was 0.1%.
However, the minister expects an economic slowdown in 2023 and 2024, which will lead to a temporary decline in real GDP per capita. “Nevertheless,” he adds, “Quebec’s progress in catching up with Ontario’s living standards should continue over the next two years.” For what? This is because the decline in real GDP per capita will be smaller in Quebec.
Word from Minister Eric Girard: “The government intends to continue its efforts to increase the potential of Quebec’s economy in order to close the wealth gap with Ontario.”
In their recent study Incursion among indicators of living standards and well-being, researchers Suzie St-Cerny and Luc Godbout from the Research Chair in Taxation and Public Finance at the University of Sherbrooke report that Quebec’s real GDP per capita will increase in 2022 compared to Canada, a decrease of 15.2%.
Compared to real GDP per capita in the United States, our decline is enormous at 52.3%. And compared to advanced OECD economies, it’s 23.1%.
As you can see, there is room for improvement in real GDP per capita.
