Finance Minister Chrystia Freeland is handing a 10-year tax holiday worth $2.1 billion to electric auto battery manufacturers, government documents show.
Government amendments to Income Tax Act regulations grant the decade-long tax waiver to battery factories on top of the billions in subsidies they are already receiving.
“The cost of foregone federal tax revenue associated with the regulatory amendment is estimated to be about $2.1 billion over 10 years starting in 2024,” reads a Regulatory Impact Analysis Statement first obtained by Blacklock’s Reporter.
“The Government of Canada is contractually obligated to provide support on a tax-neutral basis.”
Ms. Freeland has not commented on the decision other than to say in a legal notice that there were no “stakeholders to consult” beyond the auto battery manufacturers themselves.
Ms. Freeland told reporters last June 14 that it was crucial for Canada to “be at the table,” adding that the subsidies needed to be competitive with similar ones in the United States, which are given tax-free.
“We were just not as a government going to tolerate a situation in which investment was sucked out of Canada, sucked to south of the border, and I don’t think Canadian workers should tolerate that situation,” she said.
Ottawa has subsidized a proposed Volkswagen battery factory in St. Thomas, Ont.; two Stellantis battery plants, one in Windsor and one in Brampton, Ont.; a Northvolt factory in Sainte-Basile-le-Grande, Que.; a Ford battery parts factory at Bécancour, Que.; and an E-One Moli lithium battery plant in Maple Ridge, B.C.
Canadians face a $50.2 billion price tag as a result, according to a Parliamentary Budget Officer report last November. The subsidies will total $43.6 billion between 2023 and 2033 with additional debt charges of $6.6 billion.
That is “$5.8 billion higher than the $37.7 billion in announced costs,” Parliamentary Budget Officer Yves Giroux said in a media release, adding that the figures are “an estimate of the total cost.”
The report estimated that 62 percent or $26.9 billion in costs would be incurred by the federal government, while 38 percent or $16.7 billion would be paid by the provincial governments of Ontario and Quebec.
Ottawa has disputed Mr. Giroux’s figures, calling them inaccurate, but the budget officer has stood by his findings.
He pointed out that he does not have “a vested interest” during an October appearance before the Commons industry committee.
“As soon as we publish a report that sets the record straight there are accusations we have not understood the problem or have a bone to pick,” Mr. Giroux said during his testimony. “That’s not the case. We think our approach is reasonable, much more so than the government’s.”
Mr. Giroux has described the Liberal’s forecasts as “wildly optimistic.”
