Quebec revises the tax credit for career extension: finance minister’s economic update

Workers aged 60 to 64 will no longer be eligible for the career extension tax credit, which could have saved them $1,540 in tax per year.

Finance Minister Eric Girard presented an economic update on Thursday, in which he said he is continuing to review tax expenditures in order to generate savings for the government.

The career extension tax credit was introduced in 2012 to encourage older Quebecers to stay in the workforce.

However, “since the tax credit was introduced, Quebec has caught up in the labour market participation of these people,” according to Girard’s statement.

The average retirement age, which was 61.3 in 2011, has risen to 64.7 in 2023.

The Legault government has therefore decided to raise the age of eligibility for the tax credit to 65, starting in the 2025 tax year.

Workers who will be between the ages of 60 and 64 in 2025 will no longer be eligible, which will represent an average reduction in tax assistance of approximately $1,000 for around 200,000 taxpayers.

“It’s necessary to give something because it’s very difficult, for the people aged 60-65, the budget is very small,” says Montrealer Luciano Chujanniere.

“I have a bit of mixed feelings, because they want us to work as long as possible, but then they cut these credits. But if they have to cut, I can imagine they’re cutting where it hurts the least,” said another Montrealer.

“If that’s going to help the final deficit, contribute to that amount, I think it’s such a small amount, I wouldn’t have an issue with that being cut,” said Christina Kyriakou.

“My only concern is that they put the savings in the right place and that would be with our health system and with our education. So if they put it in the right place, I’m all for it. I’d rather give than receive in that instance,” says Carmelina Zola.

To make the tax credit more “effective,” the government will exclude older workers with a high net income.

It says it wants to “refocus assistance on low-income workers aged 65 and over and those in the middle class.”

For those aged 65 and over, the tax credit will begin to decrease if net income (employment income, retirement income) exceeds $56,500. The wealthiest, whose net income exceeds $81,500, will not be eligible.

$2.1 billion in new spending

The economic update revealed $2.1 billion in new spending over five years amid what Girard describes as a stronger-than-expected recovery from last year’s economic slowdown.

“It’s clear that this government has a spending problem and not a revenue problem,” says Samantha Dagres, communications advisor at the Montreal Economic Institute. “Since Legault formed office, he has increased spending by 51 per cent and what we’re being shown today is a deficit that is the highest in Quebec history, outside of pandemic time.”

Girard painted a positive picture of the province’s finances today despite a projected $11-billion deficit that remains unchanged from March’s budget.

The new spending he announced in Quebec City includes more than $250 million for the forestry sector and $1.2 billion for community development, which includes public transit.

But a representative of a collective of community organizations fighting for citizens’ rights says he’s disappointed.

“As we expected, there’s nothing new for us, we actually did a campaign for two years that we want to have more budget for organizations that we represent,” says Sylvain Lafrenière, coordinator of the Regroupement des organismes en défense collective des droits (RODCD).

Girard told reporters the government is still reviewing its spending as it moves toward its goal of balancing the budget by the 2029-30 fiscal year.

“The economic recovery is beginning in Quebec. Today, we are continuing our targeted action by focusing on the priority issues of Quebecers. The review of tax expenditures helps us prepare for a gradual and responsible return to a balanced budget,” Girard said in a press release.

The government says they’re going to help the deficit of Quebec’s public transit agencies with an injection of $879 million — $250 million of which is already allocated for 2024-2025 and another $620 million for the future deficit.

Quebec’s financing plan was unveiled two weeks after the tabling of the performance audit of transit companies by Transport Minister Geneviève Guilbault.

The report by Raymond Chabot Grant Thornton concludes that transit companies could reduce their expenses by $350 million.

Some of the other highlights of the economic update include:

• Investments totaling $2.1 billion more over the next five years
• Reducing government tax spending by $3.4 billion over five years
• Indexation of $1.2 billion per year of the tax system and social assistance benefits
• Allocation of 500 new housing units from the Rent Supplement Program to young people leaving the youth protection system
• Additional investment of $880 million over four years in the five-year public transit assistance plan
• Investment of $262 million over three years to respond to the impacts of flooding
• Economic growth will reach 1.2 per cent in 2024, while the forecast last March was 0.6 per cent
• Maintaining the accounting deficit at $8.8 billion, or 1.4 per cent of GDP, which places Quebec between British Columbia (2.1 per cent of GDP) and Ontario ( 0.6 per cent of GDP).
• Goal of returning to a balanced budget after payments to the Generations Fund by 2029-2030 , and submitting the plan to achieve this at the time of publication of the 2025-2026 budget
• Maintaining the objective of reducing the net debt burden to 30 per cent of GDP by 2037-2038

A few weeks ago, the Minister reiterated that the purpose of the exercise is to “give the state of public finances and the economy,” in addition to “responding to priority issues.”

In his November 2023 economic update, the Minister announced additional investments in housing, food banks, transit authorities, the fight against homelessness and climate change, among others.

Four months later, however, he announced a record deficit of $11 billion and said he would table a plan to return to balanced budgets when the next budget was released, for 2025-2026.

To eliminate the structural deficit, the government expects revenue growth to exceed spending growth by 1.1 percentage points by 2028-2029.

On Thursday, Girard is also scheduled to give an update on the reassessment of tax measures, an exercise expected to yield savings of $1 billion over five years.

Quebec will present its economic statement against the backdrop of U.S. President-elect Donald Trump’s promise to implement several protectionist measures that could hurt the Quebec economy.