Lower Taxes, Flexible Regulation Could Have Prevented 140K Poverty Cases in Quebec: Report

A homeless camp is shown beneath an overpass in Montreal on April 14, 2023. The Canadian Press/Graham Hughes

Lower taxes and more flexible regulation in Quebec could have prevented 140,000 poverty cases in the province, according to a newly-released report.

The study, published by public policy think tank the Montreal Economic Institute (MEI), identifies the level of taxation and industry regulations as a hurdle for Quebec residents.

“The economic literature is very clear: the weight of regulation and taxes has a negative impact on economic growth, and ultimately on social mobility,” MEI senior economist Vincent Geloso wrote. “If Quebec had a level of economic freedom similar to Alberta’s, 140,000 fewer Quebecers would have experienced an episode of poverty.”

The study authors compared Quebec’s fiscal regulatory environment to Alberta using Statistics Canada data. They concluded that if the French province was more like Alberta, there would have been fewer cases of poverty between 2013 and 2020.

Additionally, the authors said that persistent poverty, or those living in poverty for eight years or more, would have been cut in half, with 107,000 Quebecers avoiding it. The actual poverty rate in Quebec from 2013 to 2020 was 223,440 individuals, the report says.

Mr. Geloso and report co-author James Dean say governments could spend less time giving money to those in poverty and, instead, focus on removing the obstacles that keep individuals trapped in poverty.

“Removing these hurdles, i.e., increasing economic freedom, would empower the poor in ways that require little to no expenditure by government,” they wrote.

Mr. Geloso and Mr. Dean said that regulations should be more flexible for various industries. They also noted that all levels of government create barriers to competition, which slows down productivity growth. A third policy recommendation in the report focuses on housing regulations on municipal construction.

“Cities have the potential to offer great chances for upward mobility because they offer more (and more remunerative) employment opportunities,” they wrote. “But by increasing house prices and rents, housing regulations prevent people from accessing these opportunities.”

Regulation Hurdles

Licensing in various professions also contributed to higher rates of poverty in Quebec, Mr. Geloso added.

“When it comes to occupational licensing, one can think for instance of the seven months of training required to be a hairdresser in the Outaouais region, or the eight months of training to become a house painter,” Mr. Geloso said. “These are regulations that restrict opportunities for workers, and ultimately their employment options and, therefore, their potential incomes.”