Feds phasing out largest economic development tax incentive in history

Forget about auto sector grants or aerospace grants, by far the largest corporate tax break (or government incentive to stimulate economic development) in Canadian history has been the tax break to develop the oil sands*. In the new Federal budget, Canada plans to phase out the tax break for oil-sands producers.

The government estimates the oil-sands tax credit that’s being phased out is worth an average of $300 million a year. Now, we don’t know the total amount (I am sure it could be found if one looked) but it is easily in the billions of dollars.

This is why I always chuckle when the Fraser Institute or the Canada West Foundation or the editor of any of the Alberta papers or Alberta politicians grumble about ‘corporate welfare’ in Atlantic Canada while firms in their province receive billions in tax breaks. I wonder what these folks would say if the Feds put a multi-billion tax break in place in Atlantic Canada to stimulate say manufacturing projects or new media projects. That will never happen but as a hypothetical question, I think it’s an interesting academic exercise.

Now the gravy train is over. But Albertans shouldn’t fret. PM Harper announced a new billion dollar incentive program for farmers that will be disporportionally beneficial to their province.

*Not including agricultural subsidies.