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The Budget Leitão lowers the tax on financial institutions

by

Andrea Lubeck

28 March, 2018 09:45

Carlos J. Leitão | Photo : Denis Méthot

The provincial budget 2018-2019 of the minister of Finance Carlos J. Leitão makes a change to the compensatory tax on financial institutions. Currently, the majority of financial institutions doing business in Québec must pay an additional tax on the payroll.

Québec has indicated that it lowers the tax due to the anticipated increase of the loads on the wage bill arising from the improvement to the Québec pension Plan, reducing the level of this surcharge » in order to maintain the competitiveness of the sector «.

The economic Plan of the Québec, presented on 27 march, provides for a reduction of the compensation tax for all the different types of financial institutions. Thus, the category » other financial institutions «, which the insurers are part of it, sees its rate lowered to 1.37 % for 2018-2018, 1,34 % for 2019-2020, to 1.32 for 2020-2021 and 2021-2022 and 0.90 % for 2022-2023 and 2023-2024.

Ceiling of payroll

The financial institutions are also imposing a cap on their total payroll, subject to the compensation tax for financial institutions, «in order not to penalize the companies with the strongest presence in Quebec,» says the budget. Other financial institutions, therefore, have a cap payroll of $ 275 million.

These changes represent a financial impact for Québec of $ 15.5 million in 2018-2019. The compensatory tax on financial institutions for a total of $ 347 million for the same period.

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