CFIB Red Tape Report draws calls for action

News about the Canadian Federation of Independent Business's 2013 Canada's Red Tape Report, reported in an article in CICA’s Research Monitor, provoked strong reaction among some readers.

News about the Canadian Federation of Independent Business's 2013 Canada's Red Tape Report, reported in an article in CICA’s Research Monitor, provoked strong reaction among some readers. Comments received all agreed that Canadian regulatory costs could be reduced and that governments need to pay closer attention to the impact of regulation on business. But the report’s assertion that Canadian small businesses pay much more than their U.S. counterparts to comply with regulatory requirements proved more contentious.

In attempting to identify the cause of red tape, one reader gave the example of a small business client who received a $500 penalty because he filed a T2 slip on paper instead electronically, even though the form was filed on time. For this reader, the imposition of such a harsh penalty shows the government does not appreciate the struggles that small businesses have to go through with suppliers, customers, staff and many levels of government in order to comply with regulatory burdens.

A second reader observed that the government entities creating red tape do not have to absorb the costs of complying with it. According to this reader, “an intriguing possibility would be to require governments to pay compensation for the time required to comply with red tape requirements.  Perhaps if red tape ceases to be free from the point of view of the entities that impose it, government will be motivated to eliminate it.”

CFIB worked with KPMG Enterprise to survey American business and for the first time compared cost of regulation in Canada and the United States. While all commenters agreed there is scope to reduce the regulatory burden in both countries, one reader took issue with CFIB’s conclusion that Canadian businesses have to contend with more red tape than their U.S. counterparts. Based on this reader’s experience, Canada Revenue Agency requires much less reporting than the Internal Revenue Service.

CICA is a long-standing advocate for red tape reduction, not just in the tax system and for all government filings. In our submission to the federal Red Tape Reduction Committee, we recommended that the federal government eliminate regulations that do not provide a net benefit. We continue to call on the government to simplify Canada’s tax system and automate its processes through the adoption of standard business reporting (i.e., eXtensible Business Reporting Language or XBRL).

Regardless of which country imposes the higher regulatory burden on small businesses, there is clearly much to be gained from reducing red tape in both countries. According to the CFIB report, business owners in Canada and the U.S. estimated that without harming the legitimate objectives of regulations, regulatory costs could be reduced by about 30 per cent. This would equate to a $9 billion annual stimulus package in Canada.

Join in the conversation

Do you or your clients face similar struggles with Canada’s regulatory burden? What steps should governments’ take to reduce red tapez for Canadian businesses? The better we understand the issues you face, the better we can represent them to government and other stakeholders.

Post a comment below, or email Gabe Hayos directly.

Gabe

Conversations about Tax is designed to create an exchange of ideas on tax policy and practice developments and issues and their impact on Canadian accountants who practice tax.

This was originally published by one of CPA Canada’s legacy bodies.

About the Author

Gabe Hayos, FCPA, FCA, ICD.D

Vice-president, Taxation, CPA Canada

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