Quebec Budget Tabled March 25 Focuses on Record Deficit

Geoff Currier

Finance Minister Eric Girard tabled his 7th budget on March 25th. This is the most detailed, comprehensive and far-reaching budget we’ve seen from any of the provinces thus far. This budget focuses heavily on spending, producing a record deficit. It also reflects the Quebec government’s preoccupation with U.S. tariffs. The word “tariff” is mentioned no fewer than 161 times in this document.

A Tariff Based Budget: Girard’s projections are based on tariffs of 10% remaining in place for two years but he admits that there’s a 40% chance of a continent-wide recession if they are higher or stay for a longer period. Quebec’s budget is specific in its projections of potential job losses due to tariffs, stating “The effects of these tariffs will dampen growth in Québec by a total of 0.7 percentage points for 2025 and 2026 and reduce expected gains in the labour market by approximately 25 000 jobs.”

Record Deficit: This budget projects revenues of $156.3 billion in 2025-2026, growing 0.7%. According to the budget document “ After deposits of dedicated revenues in the Generations Fund, the budgetary balance within the meaning of the Balanced Budget Act shows a deficit of $13.6 billion, or 2.2% of GDP. The net debt burden will stand at 40.4% of GDP as at March 31, 2026.”

Because of the Balanced Budget Act, the government is required to be in balance by 2029-30. Girard’s budget provides projections to that effect. However, there’s also a section which allows for less optimistic projections in the event that if tariffs extend beyond two years. Quebec also plans to lobby for more federal transfer payments from Ottawa.

Higher Taxes: Quebecers hoping for tax relief will be disappointed. Instead, the government expects to bring in an additional $3 billion over the next five years through a variety of tax measures. About a third of that revenue will come from an increase in insurance premiums that Quebecers pay on home and car insurance. Premiums will rise from 9% to 9.975%.

Some tax credits are being removed such as credits for medical services such as homeopathy and one for people who contribute to municipal political parties.

Electric vehicle owners are going to get hit with an annual tax of $125 for electric and $62.50 for plug-in hybrid vehicles. The argument is that those paying fuel taxes are still paying much more.

Further measures aimed at streamlining the system and bringing in more revenue include abolishing the tax credit for retention of experienced workers,” replace(ing) the CDAE with the tax credit for the development of e-business integrating artificial intelligence (CDAEIA), with the aim of redirecting tax assistance to AI solutions”

Some credits in the mining sector are being impacted. This budget does away with the “deduction for mining exploration expenses incurred in Québec by a corporation that does not mine a mineral resource (10%); (and the) deduction for surface mining exploration expenses incurred in Québec by a corporation that does not mine a mineral resource (10%)”

"To gradually restore the balance between the property tax and the Public Utilities Tax (PUT), Budget 2025-2026 provides for PUT rates to be increased from 2027 onward, reaching a flat rate of 1.5% in 2035, a rate similar to the lowest property tax rate currently levied by Québec municipalities. “

“Starting in 2026, two deductions will be converted to non-refundable tax credits at the base rate of 14%. — The religious residence deduction is a measure designed to reduce the taxable benefit arising from the use of a residence provided by one’s employer to receive the faithful. — The deduction for assistance received for the payment of tuition fees for adult basic education programs will be converted to be consistent with tax assistance for students, which is generally non-refundable tax credits, such as the tax credit for tuition and examination fees.”

One good piece of news is the lowering of the age limit for refundable tax credit for childcare expenses from 16 to 14.

Spending:  Measures include “$4.1 billion for supporting and revitalizing Québec’s economy by providing transitional assistance to businesses affected by U.S. tariffs, supporting investment projects, fostering market diversification, and making it easier to identify Québec products; — $604.1 million for increasing our capacity for innovation by stimulating innovation and its commercialization through an updated tax assistance system, boosting innovation in strategic sectors, modernizing public services for greater efficiency, and helping SMBs with strong potential; — $759.0 million for encouraging regional contributions to wealth creation by revitalizing regional economies, leveraging our critical and strategic minerals, supporting the forestry sector, continuing to support the tourism industry and fostering the development of the bio-food sector.”  

Bottom Line: This budget is more detailed than any that have been released to this point and its projections reach farther into the future, partly, as mentioned, by the necessity to bring the government into balance by the end of the decade. It is a plan heavily impacted by tariffs and a desire to spend in order to combat the impact of those tariffs.