We estimate that the reform of child care financing recently introduced in Quebec leads to a reduction of $169 million in the disposable income of families with children 5 years and under; 48% of families lose from the reform. The alternative recommended by the Commission de révision permanente des programmes and the Commission d'examen sur la fiscalité québécoise would result in a (substantially lower) decrease of $15 million in family disposable income; 79% of families would not lose with this reform (97% of families in the first quintile would be winners, as opposed to 0% with the recent reform). This would also increase the government’s net revenue by $215 million (instead of $204 million). This alternative reform would thus be more advantageous than the one recently implemented, both for Quebec families and for the provincial government. It would also increase the federal contribution to the financing of child care, and better align this contribution with the one benefitting families in other provinces.
This paper has been the topic of a CIRANO Note.