State coffers overflowing: economic recovery gives wings to Quebec finances
State coffers are overflowing on the eve of the next election campaign due to the explosion of Quebec revenues. Inflation and the post-pandemic economic recovery are accelerating the return to balanced budgets.
• Read also: A recession is not the most likely scenario, says Girard
The Quebec government’s budget forecasts are plausible, concludes the Auditor General after analyzing the pre-election report tabled Monday morning in the National Assembly.
Revenues are up in all budget columns of the Department of Finance since the tabling of the most recent budget.
Last March, the Minister of Finance, Éric Girard, and his officials predicted a deficit of $6.1 billion and a return to a balanced budget in 2028.
However, the report now projects a deficit of only $729 million.
However, including payments to the Generations Fund, next year Quebec will have a budget surplus of almost $1.8 billion, estimates Auditor General Guylaine Leclerc.
This economic and financial situation places the government in a favorable position a few days before the general elections are called.
The paying tax
It is the income forecasts from personal income tax that are increasing the most due “in particular to the strong increase in wages”.
Recently, high inflation and favorable economic conditions « resulted in an increase in wages and salaries of 9.4% ».
The additional growth is an additional $2.3 billion for a total of $43.5 billion related to fiscal year 2022-2023.
This progression should continue in 2022-2023, then slow down the previous year in order to achieve more moderate growth.
The citizens’ tax represents 30% of all the autonomous revenues of the State.
The consumption tax also allowed the state to grow rich.
However, the uncertainty that hangs over the global economy could upset the only scenario envisaged by Quebec, notes the auditor. She criticizes in particular the absence of a plan B in the boxes of the government.
« It would have been useful, like other institutions, to present an alternative scenario making it possible to estimate the potential impact of the materialization of the main current risks on the economic outlook and on the financial framework », indicates the auditor. A scenario based on a recession would have been useful, argues Ms. Leclerc.
It points in particular to the inflationary outbreak which is causing monetary tightening and the war in Ukraine.