Quebec opposition parties say they will vote against the Liberal minority government's budget tabled Thursday, a political crisis that could either spell defeat for Premier Jean Charest or force him to backpedal on his commitment to cut income taxes.
In a hastily called news conference, the Parti Québécois warned Thursday night that if the Liberals do not back away from the proposed tax cut, it will have to face the consequences of its decision.
“It is not true that we alone will bear the burden of what may follow,” interim PQ leader François Gendron said.
“The new political reality is that it is a minority government and that it should have behaved accordingly. Rather than seeking our support, the Premier chose confrontation. In the current circumstances, it is clear that we have no other choice but to vote against this budget.”
The PQ added that if Mr. Charest wants to avoid an election, it can introduce the changes needed to meet opposition demands.
Thursday's budget included a controversial $950-million tax cut that both the Action Démocratique du Québec and the PQ have denounced.
The Liberal Premier refused to compromise, and only two months after his minority government was elected, he has initiated a game of political brinksmanship that could bring down the government within a week.
The ADQ also said it will vote against the budget on June 1.
“[The opposition] could defeat the government for any reasons, including the budget. It will be their responsibility,” Finance Minister Monique Jérôme-Forget said yesterday.
“The last campaign cost us $72-million. That's a lot of money. I don't think it would be welcomed by voters to launch us into another election campaign.”
After hearing that the PQ will vote against the budget, she said, “If they want to waste $72-million for appearances, that's their choice.”
The Liberals promised the income-tax break during last March's election campaign, using $700-million in additional federal equalization payments announced a week before the March 26 vote.
The opposition want the new federal funds used for health and education.
“We don't control the agenda. They prepared the budget and are taking the risks that they wanted to take. We have principles and we have reacted in accordance with those principles,” ADQ finance critic Gilles Taillon said.
Until the PQ came out of its caucus meeting late Thursday night, the gamble seemed safe because the party, heavily in debt and without a leader, appeared to be in no position to force an election. However, Pauline Marois is likely to take the helm in late June, and new polls have the party hoping to bounce back. A party meeting tomorrow could even give Ms. Marois the leadership earlier if an election were imminent.
PQ finance critic François Legault said he could not see how his party could support the budget. “I said last week that I couldn't see how we could vote for the budget if most of the $700-million was used for tax cuts,” he said.
Under National Assembly rules, budgets cannot be amended. Speaker Jean-Pierre Saintonge made this decision in June, 1993, at a time when nobody envisaged a minority government. The PQ has asked that the rule be changed. Speaker Michel Bissonnet will likely announce his decision today.
The Liberal government's tax break is a huge benefit for upper-middle-class families. Working parents with two children earning a combined income of $150,000 a year will save $1,859 a year. A similar couple earning $75,000 a year will pay $640 less in taxes. A single parent with a $35,000 income will save $220 a year.
The tax reduction will place Quebec fifth among the provinces in terms of the lowest tax burden.
Ms. Jérôme-Forget also announced the elimination of the tax on capital for all businesses by Jan. 1, 2011, and unveiled a $30-billion investment over five years to renovate schools and hospitals and repair roads.
The business community urged the parties to support the budget. “With this budget, Quebec's tax system will move from penalizing investment toward encouraging it,” said Jean-Luc Trahan, president of the Quebec Manufacturers and Exporters.
The Quebec Federation of Labour urged the PQ to defeat the budget. “With the urgent needs in health and education, Quebec can't afford such a massive income-tax cut,” QFL president Henri Massé said.
Despite the projection of a balanced budget for the current fiscal year, Quebec's debt will continue to grow.
By the end of the 2008-09 fiscal year, the total government debt will reach $125.2-billion, an increase of $2.8-billion over the current fiscal year.
Interest on the government debt will cost taxpayers $7.2-billion this year.
When all public-sector debt is included – such as that held by municipalities, hospitals, universities, agencies and Hydro-Québec – the total public-sector debt amounts to $191.7-billion.
Ms. Jérôme-Forget announced that $400-million a year will be used from future Hydro-Québec energy export profits as part of the current $578-million Generations Fund created in 2006 to bring down the government debt.
