corporate welfare

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If business leaders ever wonder why a chunk of the public disdain business and call for higher corporate taxes or sector-specific increases (higher royalty rates for energy and mining, higher stumpage fees in forestry) or just increased business taxation in general, here’s a clue: too many companies are addicted to corporate welfare.

Crony capitalism is problematic all on its own. Addiction to it only reinforces the perception that businesses can’t be bothered to compete on merit, in an open market, but prefer to plead for political favours and protection at taxpayers’ expense.


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There is apparently no shortage of politicians with a not-so-secret Hollywood love affair: they love to throw tax sweeteners and direct subsidies at the film industry, this in an effort to lure film production to their province or state.

The latest starry-eyed politician is the British Columbia opposition leader, Adrian Dix. In his run-up to that province’s May election, the B.C. NDP leader has promised to up the film tax credit for labour costs to 40 per cent, up from 35 per cent.


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If there was a theme in the recent federal budget, it was how chock full it was with new corporate welfare. The underlying refrain was how big government will help big business with your tax dollars.

For example, early on in Budget 2013, it is clear that crony capitalism is scattered throughout the budget. On page six, Ottawa promises $1-billion to the aerospace sector over five years through the Strategic Aerospace and Defence Initiative; that’s the main government program for disbursing taxpayer cash to the aerospace sector.


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You might think the federal Conservatives, who added $125-billion to the federal debt since 2008 and will add another $21-billion by the end of March, might be shy about unnecessary expenditures. Alas, that’s not the case, as it appears Prime Minister Stephen Harper and his colleagues would rather hand out cash to corporate Canada instead.

In just the first two weeks of January, the prime minister announced another $250-million for the Automotive Innovation Fund—a federal subsidy program that provides the auto sector with taxpayer cash for research and development.


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Most people wait until December 25th for Christmas presents. Apparently, the exception is Canada’s aerospace sector, recently the recipient of an early-season gift from former federal cabinet minister David Emerson. Emerson chaired a federally-commissioned review of the aerospace sector. The resulting report ostensibly challenges “companies, academic and research institutions, unions and governments” to “understand and adapt to changing realities.”


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For those who might have missed what’s happening in the city where Wayne Gretzky first made his mark in professional hockey, another round of taxpayer subsidies might soon be delivered to for-profit professional hockey in Edmonton.

The background: In 2011, Edmonton Oilers’ owner Daryl Katz convinced city council to deliver up taxpayer cash for a new $450 million arena.

More recently, Katz demanded more tax dollars and then visited Seattle to drop hints that he may move the Oilers to that west coast city if Edmonton City Council doesn’t agree to his latest “request.”


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With the recent first anniversary of Occupy Wall Street, consider one beef from protesters that was legitimate: crony capitalism.

In general, Occupy Wall Street types could be described as a little too naïve about the downside of more government power, and too critical of people who exchange goods and services in markets.

But insofar as any protester was annoyed with politicians who like to subsidize specific businesses—corporate welfare in other words, and which is an accurate example of abused capitalism, hand me a protest sign and give me a tent.


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The well-known quip - The definition of insanity is doing the same thing over and over again and expecting different results - is often attributed to Albert Einstein or Mark Twain. Accurate attribution has never been confirmed.


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Around Labour Day, a plethora of news stories focus on the state of unions, and often, their interaction with business. Given the name of the holiday, the attention is understandable.

However, the focus on unions and corporations, especially where governments are involved to set policy and create legislation, often misses two other critical groups: consumers and taxpayers.

It is those two cohorts that are often overlooked and whose interests are damaged when governments assume, on purpose or by accident, that only the interests of organized labour and business matter.