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Government regulations cost small businesses $36 billion

By Jillian Morgan   


The overall cost of regulation for Canadian businesses is $36.2 billion, reported the Canadian Federation of Independent Businesses (CFIB).

According to the federation, $10 billion of that total can be considered unnecessary, redundant or overly burdensome “red tape.”

The research was released by the CFIB on the first day of its annual Red Tape Awareness Week, which takes place between Jan. 22-26.

Now in its ninth year, Red Tape Awareness Week aims to highlight the cost and impact of regulations for businesses.


“Many governments across Canada are taking action to control the cost of red tape. The great news is, it’s starting to work but so much more needs to be done,” said Laura Jones, executive vice-president and chief strategic officer at CFIB.

Businesses with fewer than five employees pay $6,744 per employee. In contrast, the CFIB found that businesses with 100 or more employees spend $1,253.

The CFIB reports that regulation costs for Canadian businesses is significantly higher than those in the U.S.

“Red tape is a huge hidden tax on all Canadians but it’s small business owners who are feeling the most pain,” said Richard Truscott, vice-president at CFIB. “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.”

48 per cent of independent business owners surveyed by CFIB would not advise their children to start a business under the current level of regulation.

78 per cent said government regulations add “significant stress” to their lives, and 87 per cent believe the Canadian government has big businesses 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,” said Jones. “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.”



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