Greenhouse Canada

Red tape costs small businesses big money

January 21, 2013  By Canadian Garden Centre & Nursery

Jan. 21, 2013, Toronto — Most businesses in Canada pay more per employee
than their counterparts in the U.S. to comply with regulatory
requirements, according to a report issued by the Canadian Federation of
Independent Business (CFIB).

The report, launched to kick off Canada’s fourth annual Red Tape
Awareness Week, updates the total cost of regulation to Canadian
businesses and provides a first-ever direct comparison of these costs to
those faced by U.S. businesses. The U.S. comparison was sponsored by
KPMG Enterprise.

The largest cost difference was found in the
small business category (fewer than five employees)—the largest category
for businesses in Canada and the U.S. Businesses of this size pay 45
per cent more per employee in Canada ($5,942) to comply with government
regulation than their U.S counterparts ($4,084). The total cost of
regulation to Canadian businesses is $31 billion a year, which has
remained relatively stable since CFIB first started estimating
regulatory costs in 2005. The total cost of regulation in the U.S. is
$198 billion.


“Not all regulation is red tape, but businesses in
both countries tell us regulatory costs could be reduced by about 30 per
cent without harming the important health and safety objectives of
regulation,” said CFIB executive vice-president Laura Jones. “That’s the
equivalent of a $9 billion stimulus package each year in Canada with no

The report also found that about one-third of
business owners in Canada might not have gone into business had they
known about the burden of red tape, compared to about a quarter of U.S.
businesses. In Canada, 68 per cent of businesses say red tape
significantly reduces productivity, compared to 57 per cent in the U.S.

results of this report are clear— reducing red tape should be a
continuing priority to ensure that Canadian businesses remain
competitive here in Canada and on the global stage,” said Dennis
Fortnum, Canadian Managing Partner, KPMG Enterprise.

The federal
government announced an ambitious strategy to cut red tape last fall,
the Red Tape Reduction Action Plan. “The government had great instincts
to identify this as an issue impeding prosperity. If it sticks to the
plan, it could be a game-changer for Canada,” said Jones.

As part
of Red Tape Awareness Week, CFIB is encouraging all Canadians to join
the Red Tape Revolution by signing the online petition. The petition
will be delivered to the Prime Minister, premiers and mayors across the
country to encourage these politicians to commit to red tape reduction,
or deliver on commitments they have already made.

Print this page


Stories continue below