Minister Leitão’s reaction to the federal budget

Québec City, February 27, 2018 — Minister of Finance Carlos J. Leitão says that he is generally satisfied with the federal budget tabled today, even if there are some gaps, in Quebec’s point of view. Although there are certain issues concerning Quebec that require clarification, the Minister believes that several measures announced are in line with the work accomplished by the Government of Quebec over the course of the last few years to better the quality of life and living standards of Quebecers.

Status of women and equality

We commend the efforts made to place greater importance on women’s status in society. For a long time now, the Government of Quebec has been a leader in Canada in this domain. The federal government is now joining the Quebec government in its historic position with respect to pay equity and parental leave. On this last point, through the use of a compensation mechanism and other measures that strengthen the role of women in our society, Quebec will be able to move forward even further in its desire to become a more egalitarian society where women take their rightful place.

We also applaud the federal government’s decision to designate additional funding to ensure that Indigenous children and families have an equal chance of success.

Support for the economy

We welcome the many measures announced related to economic development, research and innovation. The sum of money dedicated to research is commended and we will ensure that Quebec obtains its fair share. Support for the softwood lumber industry is also a step in the right direction. However, we find the support dedicated to print media to be lacking.

Regarding the taxation of SMEs, we have asked the federal government to show caution in its tax reform in the current context, to avoid harming the competitiveness of SMEs. On this issue, we were heard.

Tax evasion and tax havens

The Government of Quebec is closely monitoring the federal government’s initiatives regarding tax equity. In particular, Quebec’s action plan to ensure tax equity, presented in November 2017, highlights the importance of a joint approach to fight effectively against harmful tax practices, such as the use of tax havens.

However, the Government of Quebec is concerned with the federal government’s lack of desire to increase its efforts in fighting against tax evasion on a global scale. In particular, we regret the federal government’s refusal to collect GST on intangible goods and services from foreign providers. It is important that Quebec and Canadian companies are treated fairly so as to not be at a disadvantage in relation to foreign competitors. Additionally, Quebec was expecting stronger measures for the collection of sales tax at the borders.

Cannabis legalization

The Government of Quebec reiterates that it is satisfied with the agreement concluded on December 11 regarding cannabis taxation. This agreement will ensure the fair distribution of the revenue of excise taxes applicable to cannabis products. However, in regard to the production and processing of cannabis, it is imperative that the federal government ensure the establishment of a strict and rigorous system for issuing licenses in order to remove all risk of infiltration by organized crime.

Equalization program renewal

Today, the federal government presented technical adjustments that will be applied to the equalization program for a period of five years starting April 1, 2019. On the whole, Quebec agrees with the proposed technical adjustments as they meet its demands and allow for more precision in the calculation of the fiscal capacity of the provinces.

Infrastructure

Concerning Phase 2 of the federal infrastructure plan, the Government of Quebec expects to shortly come to a satisfying agreement with the federal government. To do this, the federal government must significantly adjust the stipulated accounting to Quebec’s methods and relax some of its strict requirements that make it impossible to target the needs and priorities of Quebec and its municipal infrastructure partners. Remember that Quebec will spend more than four times the amount on infrastructure than the federal government predicted in proportion to its economy for the next ten years. It is therefore essential that the federal government adjust its demands to those of Quebec with regard to infrastructure.

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I’m happy to say that for the most part, the federal government shares the same priorities as us and is also working in the same direction. Of course, nothing is perfect and we will need to clarify certain aspects and obtain some details, but we now have all the information in hand to finalize the preparation of the 2018-2019 Québec Economic Plan that will be announced in the next few weeks. The Plan will allow us to build an even stronger Quebec for the benefit of all Quebecers.

– Carlos J. Leitão, Minister of Finance