A report from the Parliamentary Budget Officer reveals that the provincial and federal support for electric vehicle (EV) battery manufacturing in Canada is estimated to cost $5.8 billion more than initially projected by the government. The analysis focuses on recent agreements with Northvolt, Volkswagen, and Stellantis-LGES to establish EV battery manufacturing facilities in the country. Although the governments of Canada, Ontario, and Quebec had announced a combined $37.7 billion in production subsidies and construction support for these companies, the report suggests that the actual cost of government support between 2022 and 2033 could be closer to $43.6 billion. The additional $5.8 billion accounts for foregone corporate income tax revenues for the federal government and the two provinces. This discrepancy arises because the Canadian subsidies are structured to align with the U.S. Advanced Manufacturing Tax Credit, a component of the Inflation Reduction Act in the United States. The report raises awareness about the potential fiscal impact and the need for transparent communication regarding the true costs associated with government initiatives to promote the EV battery manufacturing sector.
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