A third tax cut will benefit the wealthiest more, draining $1.8 billion a year from the treasury, which could jeopardize the quality of services provided to the population.
This is the conclusion of a study by the Institute for Socio-Economic Research and Information (IRIS), which estimates that the tax change announced for this year will tend to benefit high income earners and 35% of Quebecers will not benefit.
According to this study released Wednesday, people earning $100,000 can take advantage of more than $800 a year in tax breaks, while households earning $50,000 save barely $328 in tax dues.
The tax cut, which will drain state coffers by $4.1 billion over 5 years, comes in a difficult economic context, while Quebec has experienced a continuous decline in tax revenues for two decades, eroding state social services.
Reducing the tax burden in times of economic uncertainty stems from an “irresponsible” strategy in the sense that tax breaks only stimulate consumption with no guarantees that that money will flow into Quebec’s economy.
“In fact, these tax breaks will benefit more people who have the highest incomes and do not need them,” lamented Guillaume Hébert, researcher at IRIS and co-author of the study, in a press release.
“Withholding significant sums of money from Quebec to increase the purchasing power of wealthy households is already highly controversial in normal times; With an economic slowdown or even recession approaching, such a tax cut is simply irresponsible,” he explained.