Quebec pledges tax relief, debt reduction in 2017-18 budget

Tue Mar 28, 2017 5:03pm EDT
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By Allison Lampert

QUEBEC CITY (Reuters) - Quebec's government on Tuesday said it would cut taxes and extend a prior debt-fighting commitment, while balancing the Canadian province's books in 2017-18 for the third straight year.

Finance Minister Carlos Leitao pledged C$1 billion in Quebec's C$106 billion budget to lower taxes and said his government would invest C$2.5 billion into a fund aimed at reducing the debt.

The budget, while "prudent," will increase program spending by about 4 percent at a time of comparatively low unemployment and strong growth in Canada's second-largest province, he said.

Elected in 2014, Quebec's Liberals promised balanced budgets from 2015 through 2020 after six years of deficits. On Tuesday, Leitao pledged balanced budgets for the next five years.

"Public service on credit is not a sustainable policy," he told reporters.

Quebec has one of the highest public debt loads of any province, and nearly C$10 billion was dedicated to a fund for debt servicing in the C$102.5 billion budget in 2016-17.

"It's the second year that the debt burden is declining," said Sebastien Lavoie, chief economist at Laurentian Bank Securities. "It's not every jurisdiction where that's happening."

Quebec expects its debt-fighting Generations fund, with an expected book value of C$13 billion in 2017-18, to grow to almost C$27 billion in 2021.   Continued...