Téo Taxi failure: Governments must stop playing banker

MONTREAL, Jan. 24, 2019 /CNW Telbec/ - This morning's news that Téo Taxi is generating heavy losses and that parent company Taxelco will be placing itself under the protection of the Bankruptcy Act should serve as a warning to governments, which tend to want to play banker with taxpayers' money, says the MEI.

"The government should not play the role of investor or banker for a very simple reason: It happens regularly that private investors make mistakes and fail, but when they do so, it's with their own money or with money entrusted to them voluntarily. In contrast, when the government 'places a bet' with taxpayer funds, it is generally without their consent. Moreover, a good portion of government revenues are collected from workers with modest incomes who work hard for their money," explains Michel Kelly-Gagnon, President and CEO of the MEI.

Recall that Téo Taxi received subsidies of $5 million from the Environment Department, and $4.5 million from the Department of the Economy and Innovation. The Caisse de dépôt et placement du Québec and the Quebec Solidarity Fund are also funders of the company.

"If the government really wants to help businesses, a more effective and fairer approach would be to reduce the tax burden of all companies, instead of trying to choose 'winners' and 'losers.' Let private investors?not taxpayers?make that choice, and take the risk of being right or wrong," concludes Michel Kelly-Gagnon.

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The MEI is an independent public policy think tank. Through its publications and media appearances, the MEI stimulates debate on public policies in Quebec and across Canada by proposing reforms based on market principles and entrepreneurship.

SOURCE Montreal Economic Institute