Thursday, March 19, 2009

Charest: Sitting pretty, running deficits

Could this be a sign of things to come for the rest of the country? The Charest government introduced their 2009 budget for Québec and it is not pretty. For one thing it is "suspending" the province's balanced budget law, which in any province is really a worthless piece of paper to begin with, and announcing deficits for the next four years. As well, it will increase user fees and start indexing them to inflation (except for daycare); and starting in 2011 the provincial sales tax is going up to 8.5%, which of course is going to hit lower income people the most.

There is some targeted stimulus, which is a good thing, but there is nothing in there to explain what the heck happened at the Caisse de dépôt. There's also something a bit confusing in the budget papers, and that's that revenues from natural resources is going to be negative $80 million or so. Someone help me out on that one: The province is a paradise for fish and game, and they're going to lose that much money on permits -- what, they're giving them away for free or something?

Rumour is that the finance minister in the province, Monique Jérôme-Forget, may quit her post because she's gotten fed up with fighting with Slim Jim ™ over transfer payments and equalization. On the other hand, the province also has the kind of flexibility to arrange its finances in a way that other provinces could only dream of and it (relying for resources for much of its economy) saw the warning signs long before the rest of the country, so Charest just can't say it's the global economy's fault. Of course, he has a majority for four years so the Richard Simmons wannabe can just sit pretty until things get better -- if they do.


Ontario will have its budget coming any day now, and one claim is that the province will consider harmonizing its sales tax with the GST, as does Québec, New Brunswick, Nova Scotia and Newfoundland-Labrador. We were already lied to about the health tax. Without a huge cut in the sales tax rate, or a big increase in the personal income tax exemption, or a cut in income taxes I say nyet.

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