1.6 Removing corporate subsidies: Distorting the market

Craig Cantin — Tue, 29 Nov 2011 16:00:04 +0000

“Governments are not adept at picking winners, but losers are adept at picking governments.”

Mark Milke, A Nation of Serfs

The federal government has paid the nuclear industry $17 billion in subsidies over the last four decades. Various regional development programs (Atlantic Canada Opportunities Agency, Western Economic Diversification, and Canadian Economic Development in Quebec) have funneled billions into failed enterprises. Since 1982, Industry Canada has made grants totaling more than $5.8 billion to some of Canada’s largest corporations. Technology Partnerships Canada has swallowed up $2 billion and the accelerated capital cost allowance to the oil sands industries totals over $1.3 billion a year.

Perverse subsidies distort the market and send mixed messages: reduce carbon/use more fossil fuels; create jobs/reorganize through lay-offs. Subsidies to Canada’s oil and gas industry from 1996 to 2002 totaled $8.3 billion. From 1996-2002, the government allocated $3.7 billion to achieve its Kyoto greenhouse gas reduction targets. The funding to meet Kyoto has been abandoned, but the fossil fuel subsidies continue.

Greens want an end to corporate subsidies and a start to the green tax shifting that will make the fiscal system more coherent.

Green Party MPs will:

Eliminate perverse corporate subsidies and institute new taxes on corporate activities that harm the environment;
Introduce more effective antitrust laws in concentrated industry sectors;
Require corporations to provide detailed information about their records of compliance with labour, environmental, human rights, consumer, health and safety, criminal, competition, and tax laws or policies, and protect those who expose non-compliers;
Support broad-based, democratically-structured citizens’ watchdog groups to monitor major sectors of the economy.

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1.1.2 Get the prices right

Craig Cantin — Tue, 29 Nov 2011 15:55:32 +0000

To get there from here, market distortions created by a failure to internalize externalities must be removed. In other words, we must get the prices right. The single most significant government policy tool to advance or retard economic sustainability resides in the fiscal framework.

Our fiscal plan is straightforward. Use the tax system to help meet societal and ecological goals. Get the prices right. Allow business to pursue profit, with clear signals of environmental and societal objectives.

The Green commitment to Green tax relief will:

Reduce income taxes, including a stop to the practice of over-taxing married couples;
Reduce payroll taxes; and,
Introduce a carbon tax, sending a clear economic signal that wasting energy and resources implies real costs.

According to an editorial in The Economist, September 9, 2006:

“Ideally, politicians would choose the more efficient carbon tax, which implies a relatively stable price that producers can build into their investment plans.”

The Greens will also eliminate large corporate subsidies and grants programs.

It makes no sense to subsidize the wealthiest companies on Earth to make the world’s most profitable product − a barrel of oil. The 2010 report of the International Energy Agency called for the removal of fossil fuel subsidies. Globally, they amount to over $300 billion a year, while renewables received approximately $30 billion. These perverse subsidies must be removed. It makes sense to reduce taxes on things we want – income and employment – while increasing taxes on things we do not want, like greenhouse gases and pollution that causes smog.

Canadian businesses want two things from their government: predictability and policy coherence. The Green Government will ensure that the rules are clear, the playing field is level and decision making is transparent.

Key societal goals:

Ensure Canadians have more time for friends, family and community engagement.
Send the right price signals to the economy. The days of cheap, abundant energy are over. A carbon tax will send that signal and generate the revenue to cut income taxes, allow “income splitting” and reduce the tax burden on small business.
Eliminate perverse corporate subsidies. No more “corporate welfare bums.” No more unpaid “loans” to government granting agencies.

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Corporate Subsidies Archives | Elizabeth May

1.6 Removing corporate subsidies: Distorting the market

1.1.2 Get the prices right