Business Tax Incentives for Economic Development : Do They Work

The Canadian federal government has a surprisingly small number of business income tax measures that are intended to promote economic development. Nevertheless, the amount of tax revenue forgone is substantial, likely amounting to about $8 billion in 2016. Provincial governments have implemented more economic development tax incentives than the federal government, at a total cost of about $9 billion. Most of this money is ineffectively deployed. Replacing about $14 ½ billion in federal and provincial targeted incentives with a reduction in the general corporate income tax rate would permanently raise real income in Canada by a substantial amount