The Cost of Business Subsidies in Canada: Updated Edition
Business subsidies delivered through government spending since 1961 came with significant costs to Canadian taxpayers.
In 2019, provincial business subsidies reached $27.0 billion ($2022). This represents the single largest year of provincial subsidies in Canadian history prior to COVID.
Federal business subsidies increased significantly as a result of COVID-related programs, reaching $88.5 billion in 2020 and $47.0 billion in 2021.
Although federal business subsidies declined in 2022, the new total ($11.2 billion) is nearly double the amount the federal government spent in the final pre-COVID year ($6.5 billion in 2019).
The cost of total subsidies—federal, provincial, and local—per taxpayer from 2007 to 2019 was highest in Quebec ($30,579), closely followed by Saskatchewan ($29,414). Total subsidies per taxpayer were lowest in New Brunswick ($9,484) over this time period.
On average, federal business subsidies represented 13.2% of federal corporate income-tax revenue over the period from 2007 to 2019.
Prince Edward Island had the highest level of provincial business subsidies as a share of corporate income-tax revenue at 160.8%, on average, from 2007 to 2019.
Two other provinces spent the equivalent of roughly all corporate income-tax revenue on provincial business subsidies from 2007 to 2019. Provincial subsidies, on average, represented 100.8% of annual provincial corporate income-tax revenue in Quebec and 97.5% in Manitoba.
The evidence suggests that business subsidies do not foster widespread economic growth and, thus, stand out as a key area of spending to be reformed.
