In the 1972 federal election, New Democratic Party leader David Lewis famously made “corporate welfare bums” a campaign slogan. He was referring to the scandalously large grants, loans, loan guarantees, and subsidies Canadian governments were handing out to large and profitable corporations.  Mr Lewis may have passed away in 1981 but, as On the Dole, a new report from Canadian Taxpayers Federation, documents, the corporate welfare bums are still alive and prospering, thanks to the continued connivance of government.

Over the past 23 years, the federal Department of Industry doled out over $18 billion to businesses.  Of this, $7.1 billion was in the form of repayable loans; yet, only 17.6% ($1.25 billion) has actually been repaid.

Technology Partnerships Canada (TPC), which is Ottawa's flagship corporate welfare program, has authorized $3-billion since its inception in 1996 and recovered only $169-million. This is a repayment record of less than 6%. Taxpayers were originally told every TPC investment dollar would return $1.74 in repayments from businesses;

The Top 50 subsidy recipients have received a third of all money authorized or $5.9-billion;

The Top 3 recipients have secured $2.6-billion in federal handouts. They are Pratt & Whitney ($1.5-billion authorized plus another $350-milion announced in Dec. 2006 that is not included in this report), Bombardier ($745-million authorized plus another $350-million announced in Nov. 2006), and General Motors Canada ($360-million) . . .

Perhaps because of these generous business hand-outs, among industrialised countries, Canada ranks near the highest in average combined federal-provincial corporate income tax rates.  As well, Canada has a marginal tax rate on capital that is second only to China’s.

Canada could have much more competitive corporate tax rates if the excessively generous program of business subsidies and grants were scaled back.  Not only would Canada’s international competitiveness improve, we would have a simpler, fairer, and more transparent business tax regime.

The full 30-page report can be downloaded here (pdf).  An 809-page appendix listing every business subsidy given out by Industry Canada during the period under investigation, with date and amount, can be downloaded here (pdf).

Note that the report examines only Industry Canada assistance; hand-outs through federal regional development agencies are not included. The data were compiled through freedom of information requests to Industry Canada.

Previous related post: Why give tax breaks to the oil sands?