Quebec Budget: Packed with Regression and a Zombie

The Quebec budget released yesterday is packed with an increase in regressive taxation (both in terms of user fees and sales taxes) and a Zombie. Let us start with the list of regressive tax measures and then move on to the Zombie (ht recreating eden ).

An increase of 1 cent a year for three years on gasoline taxes with provisions for large cities like Montreal and Quebec to levy further taxes.

While certainly regressive these are good taxes as they will raise revenue (I doubt they will curb consumption) for public transit which in Quebec city is in a rather shabby state for a national capital.

An unspecified increase in tuition fees

It can only be considered progressive if you consider the incomes of the students parents. So you have to assume students live with their parents and that they have access to their income: two dubious generalizations. I keep a running poll: fully 80 percent of my third year students have lived outside the family home for two or more years. For other thoughts see my post here.

A 1% increase in each of the next two years in the sales tax (including the increase announced in the previous years budget).

Again totally regressive. I suppose it was inevitable that a cash strapped government would move take up the tax space left by Ottawa with the decrease of the GST 5%.

A 3.7% percent a year increase in electricity fees starting in 2014-2015. All on top of the already scheduled increases.

Again totally regressive. And This comes on top of significant electricity fees over the past three years. Despite conservations measures on my end, my bill is up 20% over the last three years.

Annual $25 health-care premium with annual increases to $200 by 2012

Again fully regressive. But in line with many other provinces and not as high as BC where individuals pay 57$ a month or 684$ a year. Ontario should have been the preferred model. In Ontario, health insurance premiums are calculated on a progressive basis (see this Chart). That is, the higher your income the higher your premium. The distaste for progressive tax measures is more than evident.

There are some crumbs of progressiveness. Slightly higher royalty regime and a continuation of a profit surcharge tax on banks. Moreover there is in increase in support for poor families up to 510$ per year which Finance claims will more than offset the regressive nature of the tax package. This claim merits further investigation.

See the update here

As promised The Zombie.

In the Budget the Quebec government has committed to the idea of per visit user fees at hospitals and doctors’ offices. This idea has been tried, and tried again and has not worked. In fact it is such a bad idea that will not go away a UBC economists has dubbed it a Zombie Idea that will not die: Lies, Damned Lies, and Health Care Zombies: Discredited Ideas that Will Not Die. Not only has it not worked but it has been counter productive as poor people simply go less and get sicker and thus when they do arrive for care it is considerably more costly to care for them had the initial problem been taken care of. Think of the difference in cost between filling a cavity and root canal and you get the picture. The reason this idea will not go away is because it seems like a straightforward application of economics 101: make some action more expensive and people will do less of it. Which in this case is staying healthy. Need I add this idea is not only a Dumb idea but it is, like the budget, a regression.