As much as would enthusiastically cheer a decision of the Federal government to put Madame Marois and her gang of malcontents on trial for sedition one must look for a positive in the results of the recent Quebec election. It is quite likely that the PQ government will introduce a budget this autumn which proposes astronomical tax increases.. It is likely, given that the Liberals are currently without a leader and facing ongoing damage from the revelations of the corruption/construction inquiry that they are reticent to force an election. The result, at least for the short term, will be tax rates that even the new French President, Mr. Hollande would approve of.
The new tax rates which could approach 60% will cripple the middle class and seriously hamstring the already endangered entrepreneurial and professional class in La Belle Province. Add on a punitive Health Tax and a 14% HST, and threats of accelerated government royalties on the mining sector and one wonders if the result won’t be an economic depression in Quebec. Why would Marois care? She is bereft of any economic knowledge and it will only fuel her fight for demands for more money from the rest of Canada “ROC”. When Prime Minister Harper, backed overwhelmingly by public support in the ROC tells Madame to take a long walk into the Gulf of St. Lawrence the result will be a new round of vitriolic words and sentiment, coupled with economic paralysis in Quebec.
For those involved in financial and tax planning for business and professional corporations alike this unfortunate turn of events represents a supreme opportunity. The ability to introduce tax deferral vehicles that have waned in their use in the ROC will suddenly have a rebirth in Quebec. The Retirement Compensation Arrangement (RCA) and Individual Pension Plan (IPP) will become mainstays of financial planning in Quebec for at least as long as Madame’s taxation binge continues. The RCA, which requires 50% of all contributions to be deposited with the Federal government (no Provincial participation), is a much better proposition than giving near 60% of your income to the politburo in Quebec City.
The flexible withdrawal rules means that the RCA plan member, after retirement can chose to withdraw money into hopefully reduced tax rates once a Liberal or CAQ government comes to power. If Quebec continues to spiral, those RCA withdrawals may be received by the individual in their new residence of Ontario, or Alberta.
It is time to get the word out to business owners and professionals alike. They need not fear being held hostage by the PQ Jacobins. They may protect their hard earned money from funding tuitions for Quebec’s protesting class, and may instead look forward to a splendid retirement, free of Premier Pauline and her cast of confiscators.