Quebec economic update: modest financial relief to households, lower deficit

QUÉBEC – Quebec’s finance minister presented an economic update on Tuesday that offered modest savings to taxpayers, as he painted an optimistic picture of the province’s finances heading into an election year.

Eric Girard’s update includes decreases to payroll deductions for the provincial pension plan and parental insurance. The reductions, along with adjustments to how personal income taxes and social insurance benefits are indexed, are expected to represent an average gain of $182 per taxpayer in the 2026-27 fiscal year, he said.

The savings to taxpayers may be modest, but they will come “extremely quickly,” he told reporters in Quebec City.

“January 2026, it’s very soon. So it will arrive at an opportune moment,” he said. 

Continuing to reduce Quebecers’ tax burden will be a priority for the Coalition Avenir Québec if the party wins a third term in the election scheduled for next fall, he added. Polls, however, indicate the CAQ would lose the election if it were held today.

As well, Quebec is following in the footsteps of the federal government by cancelling the increase in the capital gains inclusion rate, which would have raised the rate to 67 per cent from 50 per cent.

The deficit, meanwhile, is projected to be $12.4 billion this fiscal year, down from the $13.6 billion announced in the last budget. That figure, however, includes a legally mandated payment into a fund dedicated to paying down debt. Without that transfer, the province’s deficit is forecast to be $9.9 billion, down from the $11.4 billion projected in March.

Real GDP, adjusted for inflation, is expected to rise by 0.9 per cent in 2025 and 1.1 per cent in 2026. The March budget had forecast a GDP rise of 1.1 per cent in 2025 and 1.4 per cent the following year.

Beginning on Jan. 1, the government will cut by 0.2 percentage points the contribution workers pay into the Québec Pension Plan, and by 13 per cent the rate they pay for parental insurance. “It’s because the pension plans are in good health … that we can reduce contributions,” Girard said. “We’re giving back to Quebecers what belongs to them.”

Taxes and social assistance benefits will be indexed at a rate of 2.05 per cent as of Jan. 1, which will raise the base annual rate for a person receiving social assistance to $9,600 from $9,408. While indexation is virtually automatic, Girard’s office noted that prior to 2004 previous governments at times did not apply the full adjustment.

Girard says the economy is showing encouraging signs, and the government is on track to return to a balanced budget by 2029-30.

The economic update also includes more than $400 million over five years to support economic development in regions facing challenges, especially in relation to United States tariffs. More than $290 million of that will go to the agriculture, forest and fishing industries, where businesses will receive a temporary payroll tax holiday totalling $255 million. 

The government is also adding $5 million to the amount allocated to emergency shelters for unhoused people, bringing the total budget to $26 million for the 2025-26 cold season. 

Girard also announced that the $1.8 billion surplus in the province’s green fund — earmarked for electrification and fighting climate change — will be transferred into a fund dedicated to paying down the province’s debt. The economic update document says that decision was made “in the interest of intergenerational fairness and with a view to ensuring the sustainability of public finances.”

The finance minister was also asked why the province didn’t decide to use the surplus to reduce the gas tax. “If we use the fund’s surplus, we’ll increase government spending, and when we’re in a deficit the last thing we want to do is increase spending,” he said. 

Opposition parties were quick to criticize the budget for not offering enough help to Quebecers who need it. 

Liberal Leader Pablo Rodriguez described the deficit as “historic” and said it showed poor management by a government that is “possibly the worst government in Quebec history.” 

He told reporters there “isn’t much of interest for Quebecers” in the budget, adding that the aid for forestry workers is insufficient.

Ruba Ghazal, the parliamentary leader of Québec solidaire, said the financial respite for Quebecers only amounted to about $11 per month, or the amount of a “Big Mac trio.” The party’s finance critic, Alejandra Zaga Mendez, accused the government of abandoning the fight against climate change by “diverting” surpluses from the green fund to pay down debt.

This report by The Canadian Press was first published Nov. 25, 2025.

— With files from Morgan Lowrie in Montreal