Hidden taxes cost Canadian businesses $12.6 billion annually: Smallest firms hardest hit and total price tag nearly a fourth the size of Quebec's budget



    MONTREAL, Aug. 21 /CNW/ - Groundbreaking research by the Canadian
Federation of Independent Business (CFIB) reveals businesses in this country
pay $12.6 billion a year ensuring they are filing their taxes correctly, with
the smallest companies being hit the hardest.
    "This is money being spent on accountants, tax advisers and employee time
just making sure the business is complying with the tax system, and that's on
top of the taxes remitted," CFIB executive vice president Garth Whyte said
today in Ottawa. "In effect it is a hidden tax," stated Whyte. He added that
taxes should not be so complicated that a ton of money needs to be spent to
ensure they've been done properly.
    "Particularly troubling is that the smaller the business, the greater the
cost," Whyte said, explaining that firms with fewer than five persons pay an
average of $3,928 per employee to meet the tax system requirements. By
comparison, said Whyte, businesses with 50 to 499 employees pay $481 per
person.
    Simon Prevost, CFIB's vice president, Quebec, said today in Montreal the
total cost is about one quarter of the Quebec government's $54.6 billion
budget. "The time and cost associated with tax compliance would be better
spent helping businesses grow and become more competitive," said Prevost.
    "Now that the cost of tax compliance has been quantified, the problem
needs to be addressed," said Whyte. "It is a significant component of taxation
that government at all levels must factor into their policies for the purpose
of developing simpler tax systems."

    
    CFIB is recommending:
    -  that the Canada Revenue Agency (CRA) and provincial tax
       administrations benchmark and measure tax compliance costs annually;
    -  that more resources be put into better customer service;
    -  that CRA and provinces communicate changes in tax policy more
       effectively;
    -  that an ongoing process be initiated to ease this tax burden on
       smaller businesses;
    -  that tax compliance costs be a factor in developing federal-provincial
       tax policies.
    

    This is the first in a series by CFIB on tax issues affecting Canadian
business.





For further information:

For further information: CFIB contacts for media: Audrey Azoulay, (514)
861-3234; Garth Whyte, (613) 235-2373; Lucie Charron, senior economist and
lead research person on project, (613) 235-2373. Entire research report: See
the full report on tax compliance at www.cfib.ca


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