Commission on the Reform of Ontario's Public Services

In 2011, $2.3 billion of indirect support was provided to businesses in two forms:
tax expenditures, including tax credits for research and development (R&D) and for specific
sectors such as media industries, and lower CIT rates for small business and for income from
manufacturing and processing. Tax credits that were introduced when CIT rates were high by
international standards have been maintained, even though CIT rates in Ontario have
fallen significantly.
306
CHART 11.3 Indirect Business Support — Tax Expenditures
$ Millions
2,500
2,000
1,500
1,000
500
0
1,882
2,310
2006 2011
Year
Non-Refundable Tax Credits/Deductions/Exemptions
Refundable Tax Credits
Source: Ontario Ministry of Finance based on estimates of Ontario-only tax provisions as reported in the
Ontario Economic Outlook and Fiscal Review in 2006 and 2011.
In the 2011 Ontario Budget, the government committed to undertake a review of direct
business support programs. As well, the 2011 Ontario Economic Outlook and Fiscal Review
announced that the province would conduct a review of business tax expenditures to
assess their effectiveness and administrative efficiency. The <strong>Commission</strong> commends the
government for undertaking these reviews as an important opportunity for the province to
maximize value-for-money and return on investment for taxpayers.