Amid the ongoing trade dispute with the U.S. impacting various sectors in Quebec, the Legault administration is introducing a set of initiatives to boost the financial well-being of Quebec residents. Finance Minister Eric Girard has revealed an economic update featuring tax relief for workers, utilizing the surplus from the Green Fund to address the province’s debt, and extending assistance to businesses affected by U.S. President Donald Trump’s trade tariffs.
As per the latest economic update released on Tuesday, Quebec’s economic growth for 2025 and 2026 is expected to surpass previous estimates from the last budget. The projected deficit for 2025-26, in accordance with the Balanced Budget Act, stands at $12.4 billion, lower than the $13.6 billion forecasted the previous year. These projections are contingent on the assumption that the Trump administration’s tariffs on Quebec will remain below 10 percent but could endure.
The province anticipates a 0.9 percent growth in real GDP for 2025, followed by a 1.1 percent increase in 2026 after a 1.7 percent rise in 2024. Girard aims to assist workers in saving $1.8 billion over five years by reducing contribution rates to the Quebec Pension Plan (QPP) and Quebec Parental Insurance Plan (QPIP). Effective January 1, 2026, Quebec employees could save up to $137, while self-employed individuals stand to benefit by $259, as outlined in the economic update.
Girard has proposed reallocating the $1.8 billion surplus from the Green Fund, originally designated for climate initiatives, to alleviate the province’s debt burden. The surplus will be channeled towards Quebec’s Generations Fund in 2026-27 to promote intergenerational fairness and provide long-term flexibility for Quebecers. The bulk of the surplus originates from the previous administration, and Girard emphasized the fiscal prudence of refraining from spending the surplus over the past seven years.
To utilize the Green Fund surplus for debt repayment, the government plans to secure approval through the enactment of Bill 7, sponsored by Treasury Board President France-Élaine Duranceau. While the economic update has been praised for prudent fiscal management, critics like Liberal finance spokesperson Frédéric Beauchemin have raised concerns about the government’s approach, citing the redirection of the Green Fund surplus as a misleading strategy.
Quebec’s net debt relative to GDP is projected to reach 39 percent by March 31, 2026, with the government striving to achieve a balanced budget by 2029-30 and reduce the debt ratio to 32.5 percent by 2037-38. Additionally, the government is scrapping the planned increase in the capital gains inclusion rate, resulting in substantial savings for Quebec citizens. Moreover, a 2.05 percent indexation of personal income tax and social assistance parameters is set to take effect from January 1, 2026.
In a bid to support vulnerable populations, funding will be allocated to programs such as the Residential Adaptation Assistance Program and RénoRégion, focusing on enhancing housing conditions. The government will also raise the special benefit for infant formula purchase from $22.50 to $45, benefiting low-income families with formula-dependent children.
To aid industries impacted by tariffs, the government is introducing measures to expedite write-offs for certain investments and provide tax breaks for manufacturing businesses investing in their facilities. Specifically, businesses in agriculture, fisheries, and forestry will benefit from a two-year payroll tax exemption, with the Health Services Fund contribution rate dropping to 0 percent for select industries in 2026 and 2027. Additionally, immediate expensing will be applicable to manufacturing or processing building investments from November 4, 2025, with a phased implementation until 2033.
The Legault government’s economic strategy aligns with federal initiatives, aiming to bolster the province’s economic resilience and support various sectors amidst ongoing trade challenges.