FROLITICKS

The term “corporate welfare” was reportedly invented in 1956 by an American of distinction, Ralph Nader. In the 1972 federal election campaign, the New Democratic Party (NDP) of Canada picked up the term as a major campaign theme.  At the same time, David Lewis, the then leader of the NDP, used the term in the title of his popular book, Louder Voices: The Corporate Welfare Bums. The term is often used to describe a government’s bestowal of money grants, tax breaks, or other special favorable treatment for corporations.

Remember, not long ago in the U.S. and Canada, federal governments provided bailout funds and loans to the auto industry, primarily to Chrysler and General Motors. In addition, Canadian taxpayers reportedly fell about $3.5-billion (Canadian) short of breaking even on the money that the federal and Ontario governments invested in the bailouts of Chrysler and General Motors in 2009.

Now, we have the case of a plan that includes federal and provincial money — a $372.5-million federal loan and $1 billion from the province of Quebec — for the CSeries and Global 7000 aircraft programs of Canada’s Bombardier Corporation. Bombardier is eliminating 14,500 jobs around the world by the end of next year, part of a restructuring plan aimed at helping the company turn itself around. However, as part of a PR disaster, six executive officers decided to give themselves a 50% raise bringing their total salaries to $32.6 million (U.S.) in 2016. Given that Canadian taxpayers are subsidizing the above payments and Bombardier’s planned lay-offs, there was an immediate public outcry against the planned increases in executive compensation. As evidenced over the last 50 years, this was not the first time that Bombardier had received federal and provincial assistance, totaling billions of government dollars.

Despite praising the benefits of free enterprise and the market place, governments of all stripes continue to use taxpayers’ monies to subsidize corporations for political reasons. Conservatives like to preach the benefits of reducing corporate income taxes, referred to as ‘tax expenditures’ in budgets. Governments even subsidize the oil and gas industry through such tax expenditures. Tax expenditures are now a huge part of governments’ budgets, and unlike actual expenditures reduce government revenues that could be used in support of public services and programs, including those directed at the poor and disadvantaged.

As well, a current tax loophole allows people to pay less tax on for income earned on stock options than they do if they are paid in cash. Corporate executives in particular greatly benefit since they receive much of their compensation in the form of stock options. The federal Liberals had pledged to close this tax loophole, but have backed off in their last two budgets. This loophole represents millions of savings for the wealthy and millions in revenue losses for governments. Moreover, the corporate welfare state is alive and well in Canada.