The media are reporting that economists are singing the praises of the Quebec budget, and if asked, I'd add my voice to that chorus. This is the work of adults who take their responsibilities seriously, and the Charest government is to be congratulated for finally paying attention to what economists have been telling successive governments - PLQ and PQ - over the past generation.
The can was not kicked forward: The budget acknowledges that something has to be done, and announces measures to do something. We don't see this often enough, so we should applaud when it does happen.
The tax mix: The Quebec government eschewed what would be an easy political sell (tax the rich corporations!) and moved to increase the QST by another ppt beyond the one-point increase announced in last year's budget. If you're not willing to reduce services - and apparently the Quebec government isn't - then this is the least-disruptive way of generating extra revenues.
Electricity prices: It never made sense to charge consumers prices that were half the marginal cost of production. But it turns out that increasing electricity rates is more problematic than you might think. According to my colleagues Jean-Thomas Bernard and Gérard Bélanger, some 38% of the increased revenues will be clawed back in the way of reduced equalisation payments from Ottawa. Even though the Charest government is going to have to pay 100% of the political cost of this measure, it will only receive 62% of the revenue it generates.
Health care premiums: Ontario has already started down this road, and the Quebec maximum premium of $200 is much lower than Ontario's $900. On the other hand, the Ontario premium is scaled to income; I would have liked to have seen the same idea in the Quebec budget.
University tuition: The freeze on tuition ended a few years ago, and although they have been rising at a slow pace since, they are still well below the Canadian average outside Quebec. Now they will go up further, although we won't know by how much until September or so. This is yet another good idea, and long overdue.
Gasoline taxes: An increase of 1¢/l is not really that big of a deal, but if you're looking for ways to generate revenue, this is a good one.
"Solidarity tax credit": In other words, 'giving money to poor people'. Any responsible tax shift toward consumption taxes must be accompanied by a system of transfers to compensate low-income households for their lost purchasing power, so it was good to see this part as well. Existing transfer programs - the QST rebate, property tax credit - are being bundled together and their funding is being increased to compensate for the effects of all those tax increases on low-income households. Now that we have a program dedicated to direct transfers to low-income households, we can start to think of building on it down the road - perhaps a guaranteed annual income?