CFIB: Red tape costs $37 billion

By Joel Ceausu

It cost independant Canadian businesses $37.1 billion to comply with government regulations last year through wages, professional fees, equipment expenses, renovations and losses from regulatory delay, according to the Canadian Federation of Independent Business (CFIB).

That’s an expensive leap from previous year estimates—$31.7 billion in 2012—with only some of the increase attributable to wages and employment levels.

“Red tape is a huge hidden tax on all Canadians that hits small businesses particularly hard,” said Laura Jones, executive vice-president of the CFIB, whose report last week ranked governments on their commitment to red tape accountability. “We’re asking all governments to take the first step and get on the scale” she said in a release. “Without knowing the size of the problem, it’s impossible to tackle it.”

British Columbia led the pack, extending its “one-for-one” rule until 2019. The measure ensures that for every new regulation introduced, an existing one is scrapped. Canada’s Treasury Board President Tony Clement introduced Ottawa’s Red Tape Reduction Act last January, enshrining into law its own two-year old rule.

Quebec remains stagnant, tied for second with the federal government and Ontario. Other governments (Alberta and Manitoba) have never made an official public measure of their regulatory regimes, and some are too new to judge. Nova Scotia nears the bottom of the list for not having measured its regulatory burden since 2010.

Across Canada, companies consistently outspend their American counterparts in yearly per-worker regulation costs, and a CFIB survey shows a third of Canadian entrepreneurs would not have launched businesses if they had been fully aware of government’s regulatory burden. The CFIB notes that a small business can spend 185 hours per year mired in red tape.

What’s more, the Canadian Payroll Association says there are 190 payroll regulation requirements alone in Canada, and notes Canada’s first Income Tax Act ran 11 pages in 1917, while its most current form with explanatory notes runs over 2,400 pages.

“Measure, report, repeat,” added Jones. “It’s not that hard to get a good grade. With all the lip service governments give to economic prosperity and job creation, it’s incredible that some still don’t make regulatory accountability a priority.”

The CFIB report also named “Paperweight Champions” at each government level, who “make things difficult for small business in their own unique, stifling and expensive way.”

Joining CRTC chairman Jean-Pierre Blais and Ontario Labour Minister Kevin Flynn was Plateau Mont Royal Borough Mayor Luc Ferrandez, singled out for a local rule “against plastic (PVC) patio chairs (that) forces restaurants with slim profit margins to spring for more stylish seats,” reads the statement from the Federation, which represents 109,000 small- and medium-sized companies.
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