Red tape costs Canadian businesses $10 billion per year: study

Canada’s businesses are being strangled by stringent and often unnecessary regulation, a new report from the Canadian Federation of Independent Business (CFIB) says.

The advocacy group that represents more than 100,000 small businesses across the country says the cost of regulations reached $36.2 billion last year, with $10 billion of that total representing “unnecessary, redundant or overly burdensome” red tape.

“Businesses with fewer than five employees are hardest hit, spending $6,744 per employee complying with government regulation,” the group said. “In contrast, businesses with 100 or more employees are spending only $1,253 per employee. The costs of regulation on Canadian businesses also continues to be significantly higher than costs on businesses in the US.”

“Red tape is a huge hidden tax on all Canadians but it’s small business owners who are feeling the most pain. They are on the front lines, frequently dealing with frustrating red tape including confusing language, processes that are longer than needed and rules that just don’t make sense,” said Richard Truscott, vice president at CFIB.

The research also revealed that almost half (48 per cent) of independent business would not advise their children to start a business given the current level of regulation; 78 per cent of independent business owners say excessive government regulations add significant stress to their lives; and 87 per cent believe government has big business in mind more than small business when creating regulations.

“Most alarming is what all these rules are doing to the morale of Canada’s entrepreneurs. As baby boomers continue to retire, we need the next generation of entrepreneurs to step up. If they don’t think it’s worth it to take the risk of running a business, it’s difficult to imagine the implications on job opportunities and government revenues,” CFIB said.