Godbout report: Lower income taxes, hike sales taxes and fees

A sweeping new report from tax expert Luc Godbout commissioned by the Liberal government is recommending lowering income taxes, but raising the provincial sales tax to 11 per cent, dramatically increasing hydro rates, and hiking taxes on booze, cigarettes and gasoline.

The report comes a week before Finance Minister CarlosLeitotables his budget.

The 600 page report has 71 recommendations including:

• hiking the provincial sales tax from 9.975 per cent to 11 per cent.
• increasing taxes on beer and cigarettes.
• increasing tax on gasoline by five cents a litre over five years.
• increasing basic hydro rate by $293 a year for an average home and imposing a consumption tax above a certain amount.
• offering a bonus to older workers as an incentive to remain in the workforce; $1500 to workers aged 60-64 and $2500 to workers 65 and older.

Boost economy without spending a dime

Godbout says he's found a way to make the tax system fairer and to boost the economy without costing the province a dime.

Decreasing incometax and increasing consumption taxes and fees will have a net positive effect on Quebecs economy, said Godbout at a press conference in Quebec City Thursday afternoon.

Godbout's plan would see personal income tax revenue in Quebecreduced by a total of $4.4 billion, business tax revenue reduced by a total of $1.1 billion, and payroll tax revenue reduced by $430 million.

To make up for that $6 billion shortfall, Godbout proposes the government raise taxes and fees on just about everything else.

Godbout says the net effect on revenue for the government will be neutral, but he says this redistribution of tax revenue would boost total disposable income by $600 million, increase private investment by $600 million, and create 20,000 jobs.

This reform will cost the government nothing but add 2 billion dollars to the gross domestic product, said Godbout.

Godboutaddedthe main beneficiaries of his income tax reform would be the middle class -- individuals who make between $40,000 and $100,000 a year.

The report also proposes increasing the basic personal amount before which one is required to pay income tax from $14,281 to $18,000, benefitingthose with the lowest incomes.

Opposition parties lukewarm

All the opposition parties at the National Assembly said they wanted more time to study the report.

Boththe Parti Qubcoisand the Coalition Avenir Qubec said the report contained some interesting ideas, but both said raising the provincialsales tax was unacceptable.

Qubec Solidaire MNA Amir Khadir said he considers "middle class" to be people who earn $40,000 a year or less, and he feels the report contains almost nothing for them.

"The middle class will see tax and fee increases on everything, evendiapers for their babies," said Khadir.