Quebec sales tax hike better than raising income tax: cabinet minister

QUEBEC - Quebec's economic development minister says an increase in the provincial sales tax would be fair and be better than raising income taxes.

"After turning over all the rocks and looking at cuts, if we go in that direction, the sales tax would have less of a negative impact," Clement Gignac said Wednesday.

Gignac said an increase in the sales tax would be fairer because everyone, including businesses, pays the tax when they buy something.

Citing experts, Gignac added the measure would likely encourage people to save money.

"If you take (money) off a paycheque, you don't really get a choice but with the sales tax, you can decide to save before you spend," he said.

Rumours have been circulating that Finance Minister Raymond Bachand plans to include two successive sales tax increases of one percentage point each when he tables his budget near the end of the month.

The second hike would be added to the increase of one percentage point already scheduled for January 2011. That was laid out in a previous budget.

The two increases would plug the holes left by the reduction of two percentage points in the federal GST and would give Quebec about $3.2 billion.