The Canadian Federation of Independent Business (CFIB) has found that Canadian businesses paid $36.2 billion in regulatory costs last year — $10 billion of which it said can be considered unnecessary, redundant, or overly burdensome “red tape.”
The costs of regulation for business owners have inched downward from $38.5 billion in 2014, but nonetheless remained persistently high, according to the CFIB. Based on a survey of over 7,800 business owners, the group found red tape accounted for nearly a third of the annual cost of regulation to Canadian businesses.
Regulation costs were broken down into wage costs, professional fees, required spending on equipment and renovations, and losses due to regulation delays.
Small-business owners were found to suffer a bigger hit on a per-employee basis compared to large businesses. Those with fewer than five employees had to pay regulation costs of $6,744 per worker in 2017, a slight improvement compared to the $6,949 they paid in 2014. Meanwhile, businesses with at least 100 paid $1,253 per employee last year and $1,520 per employee in 2014.
The time spent on regulation per employee was also larger for small businesses, as those with fewer than five employees spent 178 hours on regulation per worker last year. This compares to 20 hours per employee spent by those with 100 or more workers.
The burden of red tape was felt by 68% of small-business owners, who felt that it significantly reduced productivity in their business, as it reduced the amount of time and money they could devote to their enterprises. Similarly, 61% of small-business owners reported being discouraged from growing their business because of excessive government regulations.
To reduce the amount of regulatory red tape, CFIB recommended several measures such as measuring the regulatory burden on businesses, reporting the measure regularly to the public, ensuring adequate communication of existing and proposed regulation, and considering the need for and small-business impact of all new regulation.
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