Opinion: Not only does corporate welfare come at a huge cost to taxpayers, but a significant body of research indicates it doesn’t produce widespread economic growth or job creation. In fact, corporate welfare may actually hurt the economy.
But continuing to engage in a subsidy war will come with huge costs to Canadians. Indeed, federal, provincial and local governments spent subsidizing firms from 2007 to 2019 . That huge number includes government transfers to businesses but excludes other forms of government support such as loan guarantees, direct investment and regulatory privileges for particular firms or industries, so the actual level of corporate welfare was much higher.
Why? Because all else being equal, jurisdictions that hand out subsidies must impose higher tax rates on everyone else to make up the difference. Higher taxes discourage economic activity, and the higher the rates, the more economic activity they discourage. So, subsidies depress economic activity in some parts of an economy to encourage it in others.suggest
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