This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Jack Mintz, March 10, 2023
At the Prospectors and Developers Association of Canada conference in Toronto this week and at a Canola Council conference in Ottawa, President Joe Biden’s Inflation Reduction Act was the talk of both towns. Speaker after speaker noted how the subsidies for mining, batteries and advanced manufacturing will turbocharge investment in the United States. Canada and Europe won’t be able to compete with their current carbon policies.
No doubt there is some truth in these claims, but we have to remember that Biden’s subsidies come with a poisoned chalice. To qualify for many of the credits, special conditions apply. Materials must come from domestic sources (though in some cases that rule has been broadened to include countries the U.S. has a free trade agreement with — e.g., Canada). Unionized labour must be used. To qualify for higher incentive rates, investments must be in low-income or aboriginal communities. To help pay for these incentives, new taxes on corporate profits and share buybacks are being introduced.