Article content continued

Balancing the budget is of course just the first step. Two major fiscal problems confront the province: high debt and uncompetitive taxes. Fortunately, the fiscal update shows that progress is being made on these fronts as well.

Relative to the size of the provincial economy, Quebec is Canada’s most indebted province. Tackling this heavy debt burden — which if distributed equally among Quebecers would cost each man, woman and child approximately $22,000 — is imperative because research shows that a high level of government debt can hinder long-term economic growth and reduce prosperity.

There are short-term consequences, too. Governments, like families, must pay interest on the money they borrow. Quebec’s provincial government currently spends more than $10 billion in debt interest payments each year, meaning more than 10 cents of every dollar collected by the government goes to paying debt interest — not the programs Quebecers value, like health care, education and daycare.

Quebec’s shift to a balanced budget allows the government to begin tackling its debt problem. In fact, the province reduced its gross debt by $610 million last year, the first reduction in gross debt since the late 1950s, according to the government. More broadly, the government plans to reduce net debt (gross debt minus financial assets) from 49 per cent of GDP in 2015/16 to 42 per cent by 2020/21.

Taxes also require bold action. In recent years, Quebecers have faced an onslaught of tax increases including income taxes, sales tax, payroll taxes (higher QPP rates), health taxes, mining taxes and corporate income taxes. The average Quebec family bears one the heaviest tax burdens in Canada with a total tax bill from the federal, provincial and local governments consuming 44.6 per cent of income.