Quebec promises balanced budget by 2013-14

Tue Nov 20, 2012 5:41pm EST
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By Louise Egan

QUEBEC CITY (Reuters) - The Canadian province of Quebec said on Tuesday it will eliminate its budget deficit by 2013-14 through spending restraint and higher taxes on the rich, but delayed plans to raise mining royalties.

Finance Minister Nicolas Marceau promised to whittle down the budget shortfall in the current 2012-13 fiscal year to C$1.5 billion ($1.5 billion), or 0.4 percent of gross domestic product, and balance the books in the following year, as was widely expected, ending a four-year string of deficits.

The current year deficit excludes a C$1.8 billion fiscal cost of shutting down the Gentilly nuclear power plant.

About two-thirds of the effort towards achieving the target comes from limiting growth in government spending, with the rest coming from modest tax hikes and other measures such as cracking down on tax evasion and cutbacks at state-run enterprises.

The ruling Parti Quebecois won a minority of seats in the province's legislature in a September election, and needs the support of some opposition members for its budget or it will be defeated in a non-confidence vote, triggering a snap election.

The main opposition party, the Liberals, called the budget incomplete and "unacceptable" but said it was reluctant to force Quebeckers back to the polls so soon.

Liberal finance spokesman Raymond Bachand said the party would decide later on Tuesday how to proceed.

The third party, Coalition for the Future of Quebec (CAQ), will vote against the budget unless there is a "major amendment" such as a reversal of tax hikes, its leader Francois Legault said.   Continued...

Quebec's Minister of Finance Nicolas Marceau acknowledges the applause as he tables his provincial budget at the National Assembly in Quebec City, November 20, 2012. REUTERS/Jacques Boissinot/Pool