Tuesday, March 21, 2023

analysis | Election Fund of Generation Fund | Election Quebec 2022

Let me explain caq Returning to power on October 3, it has opted to take a 39% payment from the Generation Fund to finance its tax cuts over the next four years.

However, the amount paid annually to the Generation Fund comes from six specific sources, which we call Dedicated Revenue, the amount that is collected specifically to go to the Generation Fund. For example, in 2022-23, planned payments come from the following sources:

  • Hydraulic royalties from Hydro-Québec and private producers: $870 million
  • Revenue from Legacy Pool Electricity Price Index: $535 million
  • Additional contribution of $215 million per year from Hydro-Québeca
  • Mining revenue collected by the government: $484 million
  • $500 million from specific taxes on alcoholic beverages
  • Income from unclaimed assets: $55 million

It is important to understand clearly here that even though hydraulic royalty is paid by the industries, it is always the end consumer who pays all the additional taxes levied himself. A company that has to pay tax on the water it collects will add it to the price of the bottle of water you sell. It’s a principle of economics that everyone understands, especially the finance department experts in Quebec.

It’s the same principle, by the way, with carbon taxation. An oil company, whose fuel is taxed by the government, will pass the bill to you directly, without hesitation. You are the end consumer.

So, whether it’s a water-power royalty, a heritage electricity price index or a tax on alcoholic beverages, you, the Quebec taxpayer, actually pay a portion of the payments made to the Generation Fund. And so, taking 39% of the payments provided to the Generation Fund, a possible second government caq Fund his tax deductions with a portion of your taxes.

Generation Fund: Up to 40% of the promised financing

It is surprising that the Generation Fund was not one of the many topics discussed in the TVA debate on Thursday evening. To economy sector, We often talk about it because it is purely in the public interest. Did you know that the planned reduction in payments to the Generation Fund represents 27% of the value of commitments? caq in its financial structure. This is $8 billion while the commitments total $29.6 billion.

caq There is no exception. Quebec is taking the liberty of announcing a balanced budget by next year by stopping investing in the Solidarity Generation Fund. great for kitty QS : That’s about $22 billion that the party won’t need to put into the fund in 5 years. Nice nest egg! This accounts for 40% of the value of its commitments, which is $55 billion.

The party will seek approximately $2.5 billion per year in payments to the Quebecois Generation Fund, a reduction of 50 to 60% of the payments provided annually. Here, we get a $10 billion kitty, which represents 19% of the commitments.

Is it acceptable that a large number of financial executives are suddenly counting on Generation Funds to be a drain? Is it really serious to meet its commitments by demanding 19% to 40% of the required funding from the Generation Fund, without any public, widespread debate, argued a parliamentary committee?

Party Commitments – Financial Framework

  • QS : $55.3 billion
  • p q : $52.4 billion
  • QLP : $41 billion
  • PCQ : $40.2 billion
  • caq : $29.6 billion

A candy dish!

The finance minister for four years, Eric Girard, plans to change the law on the Generation Fund to integrate new debt reduction targets and new ambitions on Quebec’s indebtedness.

Pending this reform, the Generation Fund looks like a candy dish many politicians have decided to dive into to carry out their election campaigns this year.

One can say whatever, whether for or against the objectives of the Generation Fund, this instrument was created with the aim of reducing long-term debt so that future generations are not left with too much debt.

Much has been done, and rightly so, about the error of QLP in its loan calculation. This is a $16 billion mistake. But, he QLP Invites the National Assembly to debate the target once net debt falls from 38% to 32%. This will take longer than expected, in the end, due to incorrect calculations QLP, but note here that QLP Don’t give in to the temptation to bathe in the billions of Generation Funds. How convenient that would have been!

QS Spend PCQ well

All financial officers have been disclosed. The only framework that does not provide for the return of a balanced budget, one way to get there is by the Liberal Party of Quebec. It is a surprising finding following Philippe Couillard’s mandate between 2014 and 2018, where cleaning up public finances was so important amid harsh and budgetary austerity.

Quebec Solidaire is the champion of spending and revenue, while the party is counting on a tax hike and an end to payments to the Generation Fund. Under the government led by Quebec Solidaire, the level of government spending will increase from $138 billion this year to $169 billion in 2026-27, an increase of more than 22%.

The Conservative Party of Quebec is a champion of budget compression with spending levels that will rise to $148 billion within just 4 years, an increase of only 7%.

Based on the level of spending projected in the pre-election report for 2022-23, i.e. $138.3 billion, here is the increase in planned spending by parties in their respective financial structures across the mandate, by 2026-27:

  • Question: +22,2%
  • PQ: +19,9%
  • QLP: +18.7%
  • CAQ: +16.6%
  • PCQ: +7.1%

In addition, gross debt, which represents 42.1% of Gross Domestic Product For 2022, growth will continue if the Quebec Solidaires take power. It is the only party to raise debt in comparison to Gross Domestic Product Due to a sharp increase in infrastructure investment. Here are the figures for Gross Debt to GDP in 2026-27:

  • Question: 44%
  • QLP: 40.2%
  • PQ: 39,4%
  • CAQ: 35.9%
  • PCQ: 34.3%

Happy campaign ending!

Nation World News Desk
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