Quebec outlines spending cuts, tax hikes in budget

Tue Mar 30, 2010 5:01pm EDT
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By Louise Egan

QUEBEC CITY (Reuters) - The Quebec government said on Tuesday it would run a budget deficit of C$4.5 billion ($4.4 billion) in 2010-11 but vowed to balance its books by 2013-14 through a combination of spending curbs, tax hikes and user fees.

The predominantly French-speaking Canadian province also lowered its estimated budget shortfall for the 2009-10 fiscal year, ending March 31, to C$4.3 billion from C$4.7 billion previously, due to higher revenues than expected.

The Liberal government sees the deficit narrowing to C$2.9 billion in 2011-12 and to C$1.2 billion the following year.

Finance Minister Raymond Bachand promised the government would do most of the heavy lifting to eliminate the budget shortfall through spending restraint. But, because it does not want to cut services, it will look to taxpayers to carry some of the load through a sales tax hike, a new healthcare fee and other revenue-generating measures.

"What's motivating us is very, very simple. We want to maintain services for the citizens," Bachand told reporters at a press conference. "Secondly, we have more debt than all the other provinces in Canada so we have to get our act together by 2014."

Bachand said it would be much tougher to balance the budget beyond 2014, because retiring baby-boomers would mean a shrinking workforce and less wealth creation.

The budget plan will likely be passed easily by the provincial legislature, where the Liberals hold a majority after winning the December 2008 election.