Who benefits from Legault’s tax cuts?

Quebec taxpayers will benefit from a spectacular provincial tax cut of around $3.9 billion in 2023, thanks to a 1 percentage point reduction in the first two tax brackets and the tax system’s hefty indexation.

When you file your 2023 Quebec tax return, you will be able to assess the “fair value” of this tax break.

The tax cut offered by the government of François Legault, following his election promise in the last elections, is as follows. The marginal rate increases from 15 to 14% for the 1st tier and rises to $49,275 and from 20 to 19% for the 2nd tier and rises from $49,275 to $98,540.

In addition to this reduction of 1% in each of the first two tax brackets, there is an indexation of the provincial tax system for 2023 of 6.44%.

A regressive measure

When we talk about a “big” tax cut, that’s true, but not for everyone.

For what? Because from a tax perspective, there is nothing more “regressive” than a tax cut and the indexation of tax tables.

As evidence, I have the provincial tax reduction that taxpayers will benefit from in 2023 compared to 2022, depending on the different level of an individual’s taxable income. The amount of reductions takes into account the basic personal credit and the indexation of the tax system of 6.44% in 2023. Also note that my reduction calculations are based on the 2022 and 2023 personal tax tables determined by the accounting firm Raymond Chabot Grant Thornton.

CONCRETE DROP

Right from the start, you should know that there is no tax reduction under $17,000 of taxable income because there was no tax to be paid in 2022. Here are the tax cuts by taxable income bracket:

• $18,000 Income: -$165
• $25,000 Income: -$235
• $30,000 Income: -$285
• $40,000 Income: -$385
• $50,000 Income: -$633
• $60,000 Income: -$733
• $75,000 Income: -$883
• $90,000 Income: -$1033
• $100,000 Income: -$1357
• $120,000 Income: -$1484

For taxable income of $120,000, the maximum tax reduction compared to the 2022 tax year is $1,484, regardless of whether you earn $400,000 or $1 million or more.

As you may have noticed, the provincial tax cut gap clearly favors high-income people. This is obviously “normal” as they pay a significantly higher tax burden than the less wealthy.

So when the Legault government cuts taxes, it automatically favors taxpayers who pay more.

For this reason, many groups feel that cutting taxes is unfair. They would prefer the government to use this money for other purposes, such as providing more help to less affluent households, community groups, carers… or simply investing more in health and education services.