Red tape costs Canadian small businesses significantly more than U.S. counterparts

Groundbreaking study kicks off Red Tape Awareness Week^TM

TORONTO, Jan. 21, 2013 /CNW/ - 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 Businesses (CFIB). The report, launched to kick off Canada's 4^th annual Red Tape Awareness Week^TM, 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 downside."

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.

"The 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^TM, CFIB is encouraging all Canadians to join the Red Tape Revolution by signing an online petition at www.cfib.ca/redtape. 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.

As Canada's largest association of small- and medium-sized businesses, CFIB is Powered by Entrepreneurs™. Established in 1971, CFIB takes direction from more than 109,000 members in every sector nationwide, giving independent business a strong and influential voice at all levels of government and helping to grow the economy.

KPMG Enterprise is a registered trademark of KPMG International Cooperative ("KPMG International"), a Swiss entity and is used under license by KPMG LLP, a Canadian Limited Liability partnership and a member firm of the KPMG network of independent member firms.

SOURCE: CANADIAN FEDERATION OF INDEPENDENT BUSINESS

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