http://www.cbc.ca/canada/montreal/story/2009/01/14/mtl-reno-credit-1401.html
Introduction
Quebec Finance Minister Monique Jerome-Forget announced a new tax credit may be given to residents who renovate their homes in the coming year. The tax credit for new renovations is part of a liberal plan aimed to stimulate the Quebec economy. Homeowners who are eligible for the tax credit would receive reimbursement for 20% of renovation expenses, up to a maximum of $2,500. It is expected that the stimulus plan will protect approximately 25,000 jobs in Montreal’s manufacturing and construction sectors as well as create up to 2,000 new jobs in the construction industry this year alone. However, opposing parties are critical of the plan.
Connection
As discussed in chapter 4, the government may choose to control price increases and unemployment through taxes. Through the tax credit, the liberal government is attempting to increase spending in Quebec on the construction industry. Greater demand for renovations will provide work for more construction workers. This will create new jobs in the coming year. It is likely that the government wants to expand the construction industry in Quebec, as this industry was chosen for the tax break that was not given to other sectors. The tax break may also help eliminate under-the -table agreements, although this is unlikely. Moreover, this is not the intent of the liberal government. Another problem which arises is that the plan only provides new jobs in the construction industry. Thousands of people have lost their jobs in a very short span of time. Most of these people are not construction workers. Although the plan may provide a number of jobs, many people will continue to be unemployed.
Reflection
The tax break is not a good approach to stimulate the economy in my opinion. Although post-secondary education is generally not required for work in this field, training in construction is still expected. Therefore, even new job openings will be available only for people who are already working in the industry. Secondly, the plan is expected only to provide 2000 new jobs in the coming year. That number is not significantly high in comparison to the jobs which have been lost or expected to be lost. In the receding economy, I believe most people would be reluctant to spend their money on something that is for luxury rather than a need. The tax break does not provide in my opinion an incentive with enough appeal to greatly stimulate the economy in the coming year.
