Ontario is now leading the nation, and not in a good way.
For years, the province of Quebec was known as the corporate welfare capital of Canada, where the government handed out billions of dollars to wealthy companies that didn’t need taxpayer help.
But under the leadership of Premier Doug Ford, Ontario has officially passed Quebec, spending by far the most amount of taxpayer dollars on corporate handouts.
All of this is according to a new study released by the Montreal Economic Institute.
The MEI notes that between 2018 and 2023, real GDP per capita growth in Ontario, once accounting for inflation, was zero. In other words, Ontario’s economy has been flatlining for half a decade.
Yet, instead of lowering corporate taxes to spur investment in Ontario, the Ford government has leaned into a failed model that Quebec has long embraced: cherry-picking a handful of companies and giving them large handouts to encourage them to stay in the province rather than go elsewhere.
Lower corporate taxes would encourage every company that is already in Ontario to stay, while helping to attract new ones.
A limited amount of taxpayer-funded handouts does little more than try to maintain some of the investment the province already has in a select few areas.
Since 2017, government handouts to businesses in Ontario have skyrocketed by a stunning 182 per cent. The government of Ontario now spends nearly $10 billion a year giving taxpayer money to private companies.
One of the areas that taxpayer handouts have been going to in recent years is the auto industry. In 2022, Ford announced $259 million for General Motors. In 2023, the government announced a $5.4-billion handout to Stellantis. And just last year, it pledged $2.5 billion of your cash to Honda.
The Ontario government has also spent billions of dollars subsidizing electricity costs because of bungled so-called “green energy” decisions that were made during the McGuinty-Wynne era.
Why does all of this matter? For one thing, Ontario taxpayers can’t afford it. The province is running a deficit of roughly $12 billion. As Ontario taxpayers, we are spending $300 million a week on debt interest payments, and Ontario is the most indebted subnational jurisdiction in the world.
For another, the roughly $10 billion a year the Ontario government is spending on corporate welfare handouts could better be spent making the province more competitive on the tax front.
Ontario has a relatively high provincial corporate tax rate of 11.5 per cent. Ford himself recognized that the rate was too high some seven years ago, when he promised to lower it to 10.5 per cent, a commitment that has since gone unfulfilled.
Research from the MEI shows that by eliminating corporate welfare handouts, the Ontario government could lower the province’s corporate tax rate to seven per cent without hiking the deficit. This would give the province by far the lowest corporate tax rate in Canada, with Alberta currently leading the way at eight per cent.
Government decisions are all about trade-offs. By choosing to spend an obscene amount of money subsidizing corporations, in many cases wealthy ones that don’t need a handout, the Ford government is choosing not to lower corporate taxes and make the overall economy more competitive.
Ford once ran as a candidate who insisted that government spending at Queen’s Park was too high and promised to end the party with taxpayer money.
But it’s obvious for anyone to see that the party with taxpayers’ cash continues unabated.
It’s high time for Ford to return to his business roots, stop with the handouts, and make the province’s economy more competitive to attract businesses of all shapes and sizes.
Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center. He previously served as the Ontario Director at the Canadian Taxpayers Federation and a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
