Eliminating Corporate Subsidies in Canada: An Opportunity to Boost Growth

Eliminating Corporate Subsidies in Canada: An Opportunity to Boost Growth

• Though widely used in Canada, economic literature suggests corporate subsidies are a wasteful use of taxpayer dollars that do not boost economic growth.
• Subsidies are often unfair to businesses that do not receive them, and substitute the government’s judgment for consumers’ judgment, rewarding firms that create value for politicians rather than those that create value for consumers.
• Federal and provincial spending on corporate subsidies has increased substantially over time, with a marked increase beginning in 2015. Between 2007 and 2015, spending on subsidies increased from $22.2 billion to $25.1 billion (inflation-adjusted), or 12.8 percent. From 2015 until 2019, spending increased more rapidly, such that the 2019 level was 44.2 percent more than in 2015. After the pandemic, spending on corporate subsidies increased in 2022, 2023, and 2024. The inflation-adjusted level of spending in 2024 stood at $87.7 billion, more than triple the level observed in 2015.
• Even when accounting for both inflation and population, spending on subsidies has increased in every province and at the federal level between 2015 and 2024.
• The increased spending on corporate subsidies has occurred in Canada during a period of economic stagnation and renewed interest in policies that can drive economic growth.
• Governments in Canada have an opportunity to substantially boost economic growth by eliminating corporate subsidies and directing the savings to broad-based business tax relief.