The Coalition Avenir Québec (CAQ) government is avoiding broad-based tax increases, but many Quebecers will see higher costs for home and auto insurance under Finance Minister Eric Girard’s latest budget.
A key measure in the budget is an increase in the tax applied to insurance premiums. As of January 1, 2027, the tax rate on home and auto insurance premiums will rise from 9% to 9.975%, according to a report from The Gazette.
For a policyholder paying $4,000 in annual premiums, this increase will result in an additional $39 per year. Over four years, the government expects to generate nearly $1 billion in additional revenue from this change.
The tax increase comes as Quebec faces a significant budget deficit. Stéphane Leblanc, a tax partner at EY Canada, noted that Girard had limited options. “For the average taxpayer, the budget won’t have a lot of impact,” Leblanc said. “It’s mostly status quo.” He added that the government could not afford to lower taxes given its financial situation, nor could it implement significant hikes due to economic uncertainty, including ongoing trade tensions with the United States.
Insurance policyholders will also be affected by other budget measures, particularly in the automotive sector, the report said.
Quebec is introducing new annual fees for electric and plug-in hybrid vehicle owners, who currently pay less in fuel taxes that contribute to road maintenance. Beginning January 1, 2027, electric vehicle owners will pay $125 per year, while plug-in hybrid owners will pay $62.50. These fees are expected to generate $380 million over four years.
Meanwhile, luxury car owners will see a reduction in additional registration fees. The threshold for the so-called luxury vehicle tax will rise from $40,000 to $62,500, reflecting increased vehicle prices in recent years. This change is expected to cost the government $98 million over four years.
With insurance costs already rising due to inflation, climate risks, and higher claims costs, the tax increase adds another financial burden for policyholders.
Consumers may look for ways to manage costs, including adjusting coverage levels or shopping for competitive rates. As the implementation date approaches, industry stakeholders will assess the impact on affordability and market stability, according to the report.
