Ontario has replaced Quebec as Canada's biggest spender on corporate subsidies, according to a new report from the Montreal Economic Institute (MEI). The report, released Friday, shows that Ontario's corporate subsidies skyrocketed by 209% over the past decade, even after adjusting for inflation.
Ontario's subsidy spending surges
Ontario's spending on corporate subsidies rose from approximately $2.9 billion in 2014 to $11.5 billion in 2024, the most recent data available. That amounts to $713 per Ontario resident annually. In contrast, Quebec's provincial government spent $8.5 billion on subsidies over the same period.
“For the longest time, Quebec had a reputation of being the corporate welfare king,” said Renaud Brossard, MEI's vice-president of communications. “We noticed that since 2017, actually, Ontario has taken over that crown and is now the biggest spender on corporate welfare in the country.”
Tax cuts vs. subsidies
If Ontario eliminated business subsidies and used the savings to fund broad corporate tax cuts, the provincial corporate tax rate could drop from 11.5% to 4.75%. Combined with federal corporate taxes, the rate would be 19.75%.
“Even when we account for federal taxes, that would make Ontario the lowest corporate tax jurisdiction in all of North America,” Brossard said. “There would be a potential for Ontario to be so much more attractive to businesses of all sorts if it wasn't just trying to pick and choose a couple of businesses to subsidize.”
Ontario collected $27.8 billion in corporate taxes during the 2024-25 fiscal year.
Benefits of tax cuts over subsidies
Brossard argued that subsidies often provide only a one-time benefit, leaving businesses still facing high tax rates afterward. In contrast, across-the-board tax cuts would help all businesses, from large automakers like GM and Stellantis to small mom-and-pop shops.
“A subsidy is often a one-off,” Brossard explained. “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.”
The report recommends that Ontario replace its corporate welfare framework with tax cuts to boost competitiveness and avoid picking winners and losers.
