Ontario has surpassed Quebec as Canada's largest spender on corporate subsidies, according to a recent report. The report highlights a significant increase in Ontario's spending on subsidies over the past decade, with a 209% growth when adjusted for inflation.
Renaud Brossard, vice-president of communications for the Montreal Economic Institute, notes that Ontario's corporate welfare framework has become the largest in the country. "We noticed that since 2017, actually, Ontario has taken over that crown and is now the biggest spender on corporate welfare in the country," he stated.
The data shows that Ontario's corporate subsidies increased from approximately $2.9 billion in 2014 to $11.5 billion in 2024. This represents a substantial outlay of taxpayer dollars, with every Ontario resident contributing $713 annually towards subsidies.
By contrast, Quebec spent $8.5 billion on subsidies, a significantly lower amount. If Ontario were to eliminate business subsidies and instead use the funds for broad corporate tax cuts, the provincial tax rate could drop from 11.5% to 4.75%, making it an attractive destination for businesses.
This reduction in tax rates would have a positive impact on all corporate sectors in the province, according to Brossard. "A subsidy is often a one-off," he explained, adding that after Year 1, subsidized businesses still face high corporate tax rates. "That helps the big automakers like GM or Stellantis, but also the mom-and-pop shops – it helps everybody with making sure they have a little bit more money in their pockets at the end of the year, which means more money to invest in growing their presence in Ontario."
Ontario's current tax rate of 11.5% is expected to decrease significantly if subsidies are eliminated and replaced with tax cuts. When combined with federal corporate taxes, the overall tax rate for Ontario businesses would be 19.75%, the lowest in North America.
