On the eve of the presentation of the 2023-24 budgets for Quebec City and Ottawa, you may be wondering why our “nationalist” Premier François Legault has, since taking office, thought staying in Canada is good business.
Which, at least, is contrary to what he believed in 2005 when he was the author of the Year 1 budget of a sovereign Quebec whose budget showed a budget surplus after he returned taxes Quebecers pay to the federal government.
Is François Legault right when he reiterates that staying in Canada is a ‘good deal’?
Pay
Financially, the figures published by the Quebec Institute of Statistics in the 2022 edition of the Economic Accounts of Quebec’s Income and Expenditure prove him right!
According to data compiled since 2007, the federal government systematically spends more money in Quebec than Quebecers earn. In other words, in terms of Quebec revenue, the federal government has been in deficit on its budgetary commitments in La Belle province year after year for the past 15 years.
And by chance, especially under François Legault’s CAQ rule, federal spending in Quebec far outstripped the revenue we drew.
Under the Caquiste rule
In the three years from 2019 to 2021 (last year listed), Justin Trudeau’s government spent $113.5 billion more in Quebec than the federal revenue we took in, including consecutive federal deficits of:
- $17 billion in 2019
- $62 billion in 2020
- $34.5 billion in 2021
You will have guessed that Ottawa’s spending in Quebec has far exceeded the taxes, duties and contributions paid by Quebec residents due to the fabulous federal assistance given to individuals and businesses related to the pandemic.
Note that in 2020 Ottawa found itself in a hole after implementing the many federal assistance programs for victims of the pandemic across all provinces, with federal aid provided far exceeding federal revenue from each of the provinces.
Example 2021
In 2021, Justin Trudeau’s government paid Quebec about $34 billion more than “Quebec” revenue.
The federal government raised $71.5 billion in Quebec revenue. These included the following main recipes:
- Household taxes: $31.1 billion
- Corporate and Public Business Taxes: $14 billion
- Non-resident withholding tax: $2 billion
- Contributions to Social Security plans: $4.2 billion
- Taxes on production and imports: $12.9 billion
- Investment income: $4.6 billion
Well, in terms of federal spending, which totals $106 billion, the most done here in Quebec is:
- Purchase of goods and services: $19.1 billion
- Remittances to households (benefits, allowances, loans): $40.4 billion
- Transfer to Indigenous Governments: $1.84 billion
- Transfer to nonprofits (for households): $1.84 billion
- Business subsidies: $8.3 billion
- Transfers to the Government of Quebec (compensation, health, etc.): $28.1 billion
- Interest on the national debt (Quebec share): $5.3 billion
In the coming years
With government relief efforts for COVID-19 victims now a thing of the past, the gap between federal revenue and federal spending in Quebec is inevitably narrowing.
But it would be surprising if Quebec’s government deficit fell below $17 billion a year, as it did before François Legault took office.
However, PQ leader Paul St-Pierre Plamondon wants to update the Year 1 budget for sovereign Quebec concocted by François Legault in 2005.
With state aid far exceeding Quebec’s revenues, and having done so for at least 15 years, convincing Quebecers that sovereign Quebec alone will be profitable will be quite a challenge.
