Quebec Liberal Leader Jean Charest is trying to capitalize on Ottawa's Quebec-friendly budget to win Monday's election, announcing he will use the federal government's entire $700-million boost in equalization payments this year to cut personal income taxes for Quebeckers.
Mr. Charest said yesterday that if re-elected, he will use equalization payment increases announced by federal Finance Minister Jim Flaherty on Monday to give the middle class much-needed tax relief.
"Our government has been fighting for four years to give Quebec the room to manoeuvre," Mr. Charest said at a business luncheon speech in Montreal. "The federal budget hands us $700-million. This $700-million comes from the fiscal imbalance. We will give it back to Quebeckers in tax cuts."
While making the surprise promise, Mr. Charest urged Quebeckers to defeat the separatist Parti Québécois and hand him a "strong mandate" so that Quebec can return to the years of prosperity that existed more than 30 years ago, before the PQ first came to office.
Quebec's middle class has been hungry for a tax break since electing the Liberals four years ago. In the 2003 campaign, Mr. Charest promised to cut taxes by $1-billion a year but failed to meet his commitment when he took office.
Mr. Charest explained that money used to cut income taxes will be taken from increased equalization payments from Ottawa, which the province can use at its own discretion, not from transfer payments, which must be used for specific programs such as health, postsecondary education and infrastructure.
The Liberal Leader's proposal would cut income taxes for a single-income family earning $60,000 by $750 a year as of Jan. 1. A two-income family earning $100,000 a year would save $650 a year.
Mr. Charest said that when combined with the $250-million tax cut promised in his government's budget in February, the day before the election was called, taxpayers will benefit from a $950-million tax cut as of Jan. 1. This represents a saving of as much $750 a year for "an average middle-class family," he said.
"In 2003 we were the most heavily taxed citizens in North America," he said. "This tax cut now makes us the fifth most taxed among the Canadian provinces. We are progressing towards meeting the objective of meeting the Canadian average."
Quebec is getting $2.3-billion more in federal transfers and equalization payments in 2007-2008 over and above what it received in 2006-2007. That includes $1.6-billion in equalization payments. In early February, Mr. Flaherty announced an "adjustment" in equalization payments and handed more than $900-million to Quebec, which the province used in calculating its spending in its budget.
In the budget delivered on Monday, Mr. Flaherty added another $700-million to the equalization payments, which Mr. Charest is using to cut taxes.
Parti Québécois Leader André Boisclair said Mr. Charest can't be trusted since he also made a tax cut pledge in the last election.
"He's using the same old strategies from 2003," he said. "It's clear Quebeckers won't fall for the trap a second time."
A tax cut is uncalled for because the province is in worse financial shape than the Charest government claims, the PQ Leader said.
"He went into the recycling bin and found us a broken promise," Mr. Boisclair told a rally in Gatineau last night.
Mr. Charest and Action Démocratique du Québec Leader Mario Dumont, he said, are "the liar and the huckster" of this election.
He said the federal budget opens the door to Ottawa playing a role in education -- a provincial jurisdiction -- because it is ponying up extra money to the provinces.
A section of the budget that says that Ottawa wants to work "with provinces and territories to develop shared objectives and targets" in education is proof of that, the PQ Leader said. "I ask Jean Charest, I ask Mario Dumont, to stand up like real Quebeckers and say no to a federal encroachment in our jurisdictions."
Mr. Dumont also seized on the Liberals' tax-cut promises, saying that Mr. Charest's record on delivering promised relief to the middle class is dismal.
"It's not his first time on this stage. He's already promised tax cuts and they never came and it's especially weak in this case," he said at a news conference to unveil the much-anticipated financial details of $1.7-billion in ADQ campaign promises.
The measures include $850-million from a 1-per-cent reduction in government spending; $500-million to come from federal revenue; and $300-million as a result of a cut in provincial subsidies to companies.
It also includes $175-million from a more aggressive program to get able-bodied welfare recipients back to work.
Mr. Charest said federalism is better for Quebec today than it was in 2003 and it will continue to get better if the province can once and for all eliminate the temptation of wanting to create a separate country.
"Quebec has changed tremendously and the PQ has remained the same," the Liberal Leader said.
"It has taken 30 years for Montreal to achieve the level of population it had in 1976, for Quebec to find the level of unemployment it had in 1976, to have so few people on welfare as it had in 1976 and to achieve the same credit rating as it had in 1975."