October 25, 2016 / 8:17 PM / a year ago

Quebec says last year's budget surplus tops forecast, to cut tax

QUEBEC CITY, Quebec (Reuters) - The Canadian province of Quebec posted a higher-than-expected budget surplus for the previous fiscal year, its finance minister said on Tuesday in an update that also projected surpluses for the current year and next.

Quebec's Minister of Finance Carlos Leitao addresses the media before a meeting of Canada's Provincial Finance Ministers in Ottawa, Canada December 21, 2015. REUTERS/Blair Gable

The province had a C$2.2 billion ($1.65 billion) budget surplus in the 2015-16 fiscal year, well above the C$1.4 billion surplus projected in the Liberal government’s March budget.

The provincial government maintained its forecasts for a C$2 billion surplus in the current fiscal year and a C$2.5 billion surplus in fiscal 2017-18.

”Quebec’s fiscal integrity has been restored,” Finance Minister Carlos Leitao said, crediting the government’s spending controls.

Leitao lowered his growth forecasts to 1.4 percent in 2016 and 1.5 percent in 2017. His March budget had forecast growth of 1.5 percent in 2016 and 1.7 percent in 2017.

The finance minister noted lower oil prices have had a negative impact on the economy of Canada as a whole, but Quebec consumers and Quebec’s manufacturing sector have benefited, while the lower Canadian dollar has boosted exports.

In the update, Leitao announced increased spending on health and social services, education and regional development totaling C$288 million in the current fiscal year and C$910 million in 2017-2018.

He also said a health tax of up to C$1,000 a year on a taxable income of C$135,060 will be phased out Jan. 1, 2017, two years ahead of schedule. The health tax was imposed in 2010.

Quebec is also adding C$400 million to its infrastructure spending in 2017-2018 for economic development, sports facilities and spending to renovate aging school structures across the province.

For the year ended March 31, 2016, the Quebec government said it reduced its gross debt by C$610 million, bringing its gross debt-to-gross domestic product (GDP) ratio to 53.8 percent, a 1.3-percent reduction from a year earlier. The province has set a goal of a 45-percent debt-to-GDP ratio by 2026.

With additional writing by Jeffrey Hodgson; Editing by Chris Reese and Lisa Shumaker

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