Quebec budget kinder to business, delays work on mining royalties

Tue Nov 20, 2012 5:46pm EST
 

By Louise Egan

QUEBEC CITY (Reuters) - The Canadian province of Quebec promised on Tuesday to overhaul its system of mining royalties next year in a budget that was otherwise seen as more business-friendly than expected.

After winning a September election, the separatist Parti Quebecois (PQ) ruffled feathers in the corporate sector with talk of increasing the financial burden on wealthy households and on companies in order to pay for tax breaks for low and middle-income households, as well as to cover the cost of reversing the previous Liberal government's decision to raise university tuition and electricity rates.

While the PQ, which has a minority of seats in the legislature, says it still plans to follow through on some of those promises, it scaled back those ambitions somewhat in a budget seen as more conciliatory.

"If we listened to their promises during the election campaign and then look this budget, it's not the same government," said Carlos Leitao, chief economist at Laurentian Bank.

"I think they realized they're in a minority situation so they can't really do everything," he said.

Leitao said the first few weeks in power for the PQ gave a negative impression to investors that it did not know how to manage the economy. "With this budget they're giving the impression that they're not anti-business."

The PQ has delayed any move on mining royalties, made no mention of measures to limit foreign takeovers in the budget and instead introduced a 10-year tax holiday for major private investments in targeted sectors such as manufacturing.

It also softened its stance on freezing electricity rates and on abolishing a special fund for paying down the debt. Prior to the budget, the government also backed down on its tax for the wealthy.   Continued...

 
Quebec's Minister of Finance Nicolas Marceau speaks as he tables his provincial budget at the National Assembly in Quebec City, November 20, 2012. REUTERS/Mathieu Belanger