{"id":3963,"date":"2025-02-24T02:00:42","date_gmt":"2025-02-24T07:00:42","guid":{"rendered":"https:\/\/cpp.hec.ca\/en\/?p=3963"},"modified":"2025-02-21T11:19:39","modified_gmt":"2025-02-21T16:19:39","slug":"evaluation-of-tax-policy-on-tax-credits-for-tax-advantaged-funds","status":"publish","type":"post","link":"https:\/\/cpp.hec.ca\/en\/evaluation-of-tax-policy-on-tax-credits-for-tax-advantaged-funds\/","title":{"rendered":"Evaluation of tax policy on tax credits for tax-advantaged funds"},"content":{"rendered":"

The HEC Montr\u00e9al Centre for Productivity and Prosperity \u2013 Walter J. Somers Foundation (CPP) published its conclusions today<\/a> under its mandate from the Minist\u00e8re des Finances du Qu\u00e9bec to analyze the effectiveness of fiscal policy relating to income tax credits for tax-advantaged funds. Based on tax data from thousands of Quebec firms, the CPP researchers came to a clear conclusion: maintaining this policy cannot be justified, given the size of the tax expenditure it involves.<\/p>\n

\u201cThe government is stubbornly applying tax strategies based on the needs of another era,\u201d explains Robert Gagn\u00e9, CPP Director and co-author of the study. \u201cOn average, the Quebec government gave up revenue of approximately $156\u00a0million a year to finance the credit for contributions to labour-sponsored funds between 2012 and 2019, meaning an average cost of $45,594 for each job created. Given that job creation hasn\u2019t been an economic development concern for at least 10\u00a0years, \u00a0this is obviously a disproportionate expenditure.\u201d<\/p>\n

The study also examines the claims of profitability by the tax-advantaged funds concerned, and reveals that their impact on tax revenue does not offset the related tax expenditure. \u201cIt takes an average of 15\u00a0years for the government to recover the tax expenditure committed to finance a round of investment. And even then, a large part of the amount recovered in taxes would be financed by increased contributions to the Health Services Fund associated with the jobs created, which assumes that these jobs could not have been created without the help of the funds,\u201d notes Jonathan Deslauriers, CPP Executive Director and co-author of the study. \u201cAlthough we know that the policy is not intended to increase tax revenue, maintaining these associated credits for purposes of economic development seems hard to justify.\u201d<\/p>\n

Lastly, in view of the US government\u2019s threats to impose tariffs, the HEC Montr\u00e9al researchers warn the Quebec government not to fall into the trap of trying to save jobs. Productivity is the issue that Quebec must address to guarantee its economic prosperity.<\/p>\n

\u201cThe tariffs must not be used as an excuse to focus even more on job creation, if the objective is to improve Quebec\u2019s lagging productivity. Over 80% of the fiscal support that goes to businesses is still intended to stimulate employment, directly or indirectly, rather than competitiveness. The fiscal policy concerning income tax credits for tax-advantaged funds unfortunately is one in a long list of outdated and costly tax policies that the government must rethink,\u201d states Gagn\u00e9.<\/p>\n

\n

To read more : Deslauriers, Jonathan, Robert Gagn\u00e9 and Jonathan Par\u00e9, \u00c9valuation de la politique fiscale relative aux cr\u00e9dits d’imp\u00f4t pour les fonds fiscalis\u00e9s<\/a>, Centre for Productivity and Prosperity (CPP) \u2013 Walter J. Somers Foundation, HEC Montr\u00e9al, February 2025 (in french only)<\/p>\n<\/div><\/div><\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":4,"featured_media":3962,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,7],"tags":[],"class_list":["post-3963","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-public-policy","category-publications"],"_links":{"self":[{"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/posts\/3963","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/comments?post=3963"}],"version-history":[{"count":4,"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/posts\/3963\/revisions"}],"predecessor-version":[{"id":3975,"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/posts\/3963\/revisions\/3975"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/media\/3962"}],"wp:attachment":[{"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/media?parent=3963"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/categories?post=3963"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cpp.hec.ca\/en\/wp-json\/wp\/v2\/tags?post=3963"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}