Between 2007 and 2019, a total of $352.1 billion in business grants were paid by all three levels of government, with thousands to tens of thousands of dollars spent by Canadian taxpayers. Research at the Fraser Institute.
Think-tank senior economists and study co-authors Tegan Hill and Joel Emes consider continued budget deficits and the questionable effectiveness of corporate subsidies to achieve broader economic growth. said the Canadian government needed to carefully reassess such spending.
They noted that over the same 13-year period, $327.5 billion in defense spending was $24.6 billion less than corporate subsidies.
“These subsidies to businesses, also known as corporate welfare, come at enormous costs to government budgets and taxpayers, but do little to stimulate economic growth,” Hill said. increase. press release.
Adjusted for inflation, federal aid totaled $76.7 billion, state aid $223.3 billion, and local aid $52.1 billion, according to the study. The authors say that this amount is not a blanket measure of government support for companies, meaning that the true level of government support for a particular company will be “higher.”
The financial costs of corporate subsidies are ultimately borne by taxpayers, the authors said.
For Canadians who paid taxes between 2007 and 2019, the total subsidies per tax filer by province were, in descending order: $11,290 in Manitoba, Columbia; $8,511 in Nova Scotia; $7,057 in Newfoundland and Labrador; $6,048 in New Brunswick.
There is little academic evidence that subsidies can generate broad-based economic growth or help create jobs, according to research. Instead, corporate subsidies are attempts by governments to “pick winners by interfering in the free market,” and thus can have a negative impact on economic development.
“Rather than favoring certain companies or industries, governments can lower corporate income taxes and help promote an economic growth environment that gives all companies opportunities and incentives to succeed,” said Hill. I’m here.
state subsidy
The study also reviewed the cost of subsidies in a ‘budget context’. It shows the amount of taxes that could be reduced or eliminated in the absence of government subsidies. By valuing state subsidies as a percentage of corresponding corporate income tax revenues from 2007 to 2019, the study found that tax rates in certain states were significantly higher.
PEI has the highest percentage of state subsidies in corporate income tax revenue, averaging 162.9% from 2007 to 2019. This means the state could have eliminated all corporate income taxes during the period if it had “done subsidies to businesses. There’s money left over.”
Quebec and Manitoba spend nearly all their corporate income tax revenue on state subsidies, a study found.
On average, from 2007 to 2019, Quebec’s state aid accounted for 100.9% of the state’s annual corporate income tax revenue, compared to 97.6% for Manitoba. This means that all state corporate income taxes could have been effectively eliminated during the period if the two state governments had also eliminated state subsidies to businesses.
Saskatchewan and British Columbia also spent relatively more on state aid as a percentage of state corporate income tax revenue during the same period, averaging 88.6% and 70.7%, respectively.
Business grants accounted for about half of all corporate income tax revenue on average in Ontario (46.1%) and Nova Scotia (47.6%) from 2007 to 2019. Business grants were typical in her remaining three states (New Brunswick, Alberta, Newfoundland and Labrador). On average 30-40% of corporate income tax revenue. This means that corporate income taxes could have been “significantly lower” had governments eliminated business subsidies in any of those states, the study said.