MONTREAL – Quebecers will save on items like granola bars and toilet paper and pay less to renew their license plates, as part of a list of the province’s spending measures aimed at driving down the soaring cost of living.
But some worry these goodies handed out as the fall provincial election looms will have little impact in the long run.
Premier Christine Frechette rolled out the savings plan at a grocery store in Sherbrooke, Que., saying her top priority is to help Quebecers facing the cost crunch of high grocery bills and rising gas prices.
“We need to give Quebecers oxygen, we need to give them financial help,” said Frechette.
Tax on grocery items
The first measure Frechette rolled out is the permanent abolition of the provincial sales tax (PST) on items including:
- Muffins
- Nuts
- Cut up fruits and vegetables
- Toilet paper
Basic grocery items like milk, meat and produce are already exempt from the PST, while others like muffins are taxed when sold in packs of less than six items. Quebec will remove the tax as of mid-July, in a move expected to save the average household about $50 annually, but will cost the treasury about $100 million per year.
Desjardins chief economist Jimmy Jean says this kind of measure only has an impact in the short term.
“Higher-income taxpayers will spend more so they will benefit disproportionately from, from that kind of measure,” said Jean. “The second issue with that is that higher-income households are more likely to save it, rather than spending back in the economy.”
License plate renewals
As of Sept. 1, Quebecers will also pay $50 less to renew their license plates. This measure is designed to help drivers struggling with higher prices at the pump, following a different road map than the federal government, which reduced the federal excise tax.
This will reduce costs for the license plates of 4.9 million vehicles in Quebec.
Money transfer
A third measure aims to put money back into the bank accounts of some low- and middle-income households that receive the Solidarity Tax Credit, which impacts about 3.5 million people.
As of June 4:
- A single Quebecer will receive a $100 money transfer
- Single-parent families and couples without children will receive $150
- A couple with two children will receive $200
Total savings
Quebec estimates these measures will add up to an extra $350 in the pocketbooks of several families with two adults and two children. In the last budget in March, Quebec Finance Minister Eric Girard had set aside $250 million for the leader taking over from former premier Francois Legault, who stepped down earlier this year to fulfill promises made during the leadership race.
Frechette has blown through that envelope and has now added $336 million dollars in spending. Girard says the province can afford it.
“The government’s revenue is better than expected,” he said. “We are talking about more income tax revenue from residents and corporations, as well as sales taxes and federal transfers.”
Some in the financial sector worry that the series of smaller measures won’t have an impact in the long run.
“Every measure that a government takes needs to be done in the spirit of raising the GDP per capita. So, boosting productivity and getting investments moving. That’s really the name of the game,” said Jean. “So that’s why … I don’t welcome those kinds of measures, because they only have a very short-term impact. Whereas given the demographic challenges and various long-term challenges that we have, this is really where we need to focus any effort.”
Frechette though, says these measures will add up to more money in Quebecers’ wallets that will help people of all ages at a difficult time.
