NEWS

PQ minority faces 1st test over tax hikes

09/25/2012 01:14 EDT | Updated 11/24/2012 05:12 EST
Quebec Premier Pauline Marois could have problems coming up with the cash to fund the abolition of the province's health tax, in the first test of her minority government.

Both the opposition Liberals and the Coalition Avenir Québec, who between them hold a majority of the seats in Quebec's national assembly, say they will vote down Marois's plan to fund the tax cut by retroactively raising income taxes on the rich.

The premier, like the CAQ, pledged in the recent Quebec election campaign to abolish the $200-a-year health levy, saying that as a flat tax, it disproportionately hurts low-income earners. Marois said she would instead raise taxes on people making more than $130,000 a year to make up for the estimated $1 billion that the health tax brought in last year.

But while scrapping the health tax doesn't require the Parti Québécois government to pass legislation, raising tax rates does. And with only 54 of the 125 seats in the national assembly, the PQ will need the backing of either the Liberals or the CAQ.

Former Liberal finance minister Raymond Bachand said his party will never support imposing income-tax hikes retroactively, as the PQ is planning.

"That's just not done in taxation," he said. "We will oppose this surtax."

Bachand said while the PQ campaigned on a tax hike for the rich, it never said it would apply retroactively.

Christian Dubé, the CAQ's finance critic, said Marois is moving too quickly on a major policy initiative without sitting down with opposition parties to take a long look at the province's financial situation.

"The CAQ, like the PQ, wants to abolish the health tax, but we don't agree on the means," Dubé said. "The CAQ is demanding an immediate clarification on this and an update on the economic situation."

Finance Minister Nicolas Marceau turned down interview requests on Monday.

The former Liberal government brought in the health tax in 2010. It started out as a $25-per-person fee, but rose to $100 in 2011 and $200 this year. It's levied on every taxpayer over age 18, without regard to income.

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