Description: Several media reported this week on a recent Fraser Institute study on the extent of corporate welfare in Canada. The various business subsidies “come with huge costs to government budgets and taxpayers while doing little if anything to stimulate economic growth,” according to Tegan Hill, a co-author of the report. From 2007 through 2019, the federal government tallied up over $75 million in subsidies, while the provinces kicked in more than to $220 billion. Even municipalities were a big player, with that government sector contributing another $52.1 billion. The study points out that a number of provinces could have cut out their corporate taxes with no impact on the public purse if they had also eliminated their business subsidies.
Date: March 14, 2023
1) Were you aware of the corporate welfare phenomenon? What is your opinion of these subsidies?
2) Have you ever looked around your university town to think about what subsidies might be going to the various businesses around the area?
3) Chapter Thirteen of Wiley’s Financial Accounting: Tools for Business Decision-Making deals with the Statement of Cash Flow. How would a subsidy from government show up in this statement?