* Minority government says will negotiate on tax hikes
* Parti Quebecois needs support of opposition to govern
* PQ plans a range of higher taxes to eliminate deficit
By Rita Devlin Marier
MONTREAL, Sept 25 Quebec's newly elected
separatist minority government on Tuesday conceded it might have
a challenge fulfilling a campaign pledge to raise taxes and
thereby balance the budget.
The Parti Quebecois, which won power on Sept. 4, promised to
abolish a flat C$200 ($204) annual tax which the former Liberal
government imposed on most Quebecers to pay for healthcare.
The PQ had said it would make up the resulting C$1.0 billion
shortfall - as well as cover the cost of expanding a subsidized
day-care scheme and cancelling planned university tuition fee
hikes - by increasing personal and corporate taxes.
But the PQ, which also vowed to balance the budget by
2013/14, only won a narrow minority and must now rely on support
from opposition parties to govern.
Finance Minister Nicolas Marceau said he was open to
discussing how the government would balance the budget but
insisted it would not back down on cutting the healthcare tax.
"We were always very clear that the cancellation of the
healthcare tax for five million Quebecers would be compensated
by more substantial income taxes for wealthier taxpayers ... and
we said we would implement the measure within 100 days," he said
in an interview with public broadcaster Radio-Canada.
"As for the way of doing it, we are open to discussion. We
have a minority government, and we understand that implies there
will be compromise and discussion ... If a wall goes up in front
of us, we won't ram into it on purpose," he said.
The outgoing Liberals said in their March 20 budget that the
province would run a C$1.5 billion deficit in 2012-13.
The PQ says it will cut the personal income tax exemption
for capital gains to 25 percent from 50 percent, halve
incometax credits on dividends and create two higher-incometax
brackets starting at C$130,000 and C$250,000.
It also promises to increase taxes and royalty rates on
mining firms operating in the province.
Opposition parties are unhappy about media reports that the
planned tax hikes would be imposed retroactively. Marceau has
not confirmed this publicly.
The government could either negotiate with other parties or
take a risk and try to push through the tax measures, gambling
that the opposition would not want to bring down Premier Pauline
Marois so soon after she won power.
The left-leaning PQ won 54 seats in the 125 legislature on
Sept. 4, returning to power after nine years in opposition.
Marois has already announced the government will cancel
controversial hikes in student tuition fees that the Liberals
announced earlier this year.
The PQ's fragile grip on power means it will be unable to
hold another referendum on breaking away from Canada. Two
previous province-wide votes on gaining independence, in 1980
and 1995, both failed.