Hidden taxes cost Canadian businesses $12.6 billion annually with smallest firms hardest hit

    OTTAWA, 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's executive vice president Garth Whyte said
today in Ottawa. "In effect it is a hidden tax," Whyte stated. 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
    "The time and cost associated with tax compliance would be better spent
helping businesses grow and become more competitive," said Whyte. He added
that since the cost of tax compliance has now been quantified, the problem
needs to be addressed. "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
    -   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

For further information:

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

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