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Premier Pauline Marois and her party are abandoning a popular initiative to repeal a $200 health tax. (CHRISTINNE MUSCHI/REUTERS)
Premier Pauline Marois and her party are abandoning a popular initiative to repeal a $200 health tax. (CHRISTINNE MUSCHI/REUTERS)

TAXES

Parti Québécois abandons campaign cornerstone Add to ...

Election promises made by the Parti Québécois are crumbling under the weight of its minority government status.

One by one, the PQ is abandoning the pillars of its campaign, including a popular initiative to repeal the $200 health tax and the controversial plan to increase taxes on the rich retroactively. At the same time, it is backing off its threat to demand that Ottawa hand over more powers.

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The changes are coming out while Premier Pauline Marois is on a trip abroad to promote her new government’s credentials.

Instead of abolishing the health tax as promised during the summer’s election campaign, Finance Minister Nicolas Marceau announced on Wednesday that Quebeckers will have to pay it when they file provincial income tax next spring.

The PQ will go further, in fact, and maintain the tax indefinitely under what Mr. Marceau called a more “progressive” system to be introduced in 2013. Those earning between $42,000 and $130,000 a year will pay the same as under the current system, while wealthier taxpayers will pay more and those with lower incomes will pay less.

The government will also introduce a new tax bracket next year of 25.75 per cent on individual incomes higher than $100,000 annually, a 1.75 per cent increase over the current rate.

In return, Mr. Marceau abandoned his plan to increase the capital gains tax retroactively and a proposal to change the dividend tax rate to generate new revenues.

The minister said he is respecting the “spirit” of his party’s election promises, but in a minority government, his hands are tied given the strong opposition from political opponents and the business community.

“The position we are announcing today is a position of compromise. It results mainly from the verdict of the Sept. 4 [election]. This verdict was one in which we are a minority government,” Mr. Marceau said. “Some of the changes … take into account the objections that were raised by the business community.”

The government also invoked its minority status in backing down from other key election promises, including demands for new powers from Ottawa, blaming the opposition in the National Assembly and a non-receptive Harper government.

Minister of Intergovernmental Affairs Alexandre Cloutier said in an interview that his government will focus on files on which it can come to a quick agreement with the Conservatives in Ottawa. He said constitutional matters such as employment insurance and jurisdiction over communications will be put on the back burner while the PQ explores a deal on infrastructure funding and ending duplications in government programs.

“We are starting with what is the most obvious, with files that are self-evident and that don’t involve the Constitution,” Mr. Cloutier said. His comments came ahead of the first meeting between Prime Minister Stephen Harper and Ms. Marois at the Francophonie Summit in Kinshasa on Saturday that both leaders have promised will be cordial.

Mr. Cloutier said the PQ’s fundamental objective has not changed, and that the party is not abandoning its traditional demands for complete autonomy from the federal government. “For now, we have a reasonable attitude because we have to work within the parameters of our mandate. We are working on matters that can quickly become consensual.”

But building a consensus with the opposition parties may be difficult. On crucial fiscal matters, the government faces lower than projected economic growth and a shortfall in revenue. Mr. Marceau insisted he is still on target to eliminate the province’s deficit by the end of 2013-2014.

The opposition parties argued that the PQ has shown that it cannot keep its promises and has already lost all credibility with voters.

“The Parti Québécois made the abolishing of the health tax their main election promise, and now, today, Quebec voters have been betrayed,” said Liberal finance critic Raymond Bachand, who is seeking his party’s leadership.

He added that his party would vote against any tax increase the PQ puts forward.

Coalition Avenir Québec l Leader François Legault was less categorical, given that his party is not in a position to fight another election so soon. “Mr. Marceau will simply have to return to the drawing board,” he said.

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