This week, parliament resumed in Ottawa, and Prime Minister Stephen Harper declared that he would be making the economy his priority. Now, his minister for small business, my friend Maxime Bernier, just happens to have in his hands an important report from the Red Tape Reduction Commission. The Canadian Federation of Independent Business (CFIB) estimates that Canadian businesses spend some $30.5 billion a year to comply with obligations from all levels of government.
A permanent struggle against excessive regulation is required
On the one hand, red tape often takes the form of information that businesses must submit in duplicate or triplicate, obsolete requirements, and lots of time wasted to supply data for reports that at the end of the day wind up collecting dust on some forgotten shelf. If the government wants to get rid of absurd rules, countless forms, and excessive regulation for good, it must find a different solution than just setting up a task force every five years, as it has done up until now.
For starters, in order to deal with the problem, it would be good to document, measure and account for the costs of regulation. Currently, to our knowledge, the CFIB is alone in producing such an analysis, but it does not have the resources to measure and tackle this phenomenon in an exhaustive and systematic manner.
On the other hand, while reducing excessive regulation is good, keeping it from proliferating in the first place is even better. With this in mind, since new rules and new forms are constantly being created, a government organization that is just as permanent should be set up in order to provide a counterweight to this phenomenon. And it would be beneficial for the most flagrant cases to be divulged publicly at regular intervals in order to encourage bureaucrats and legislators to behave responsibly. To ensure its independence, this organization could come under the Office of the Auditor General and function according to the same basic operational principal, which is to say public denunciation, also known as « name-and shame. »
I am really not in the habit of proposing the creation of new government organizations. But once is no custom, and you can bet that bureaucrats who are put on the trail of absurd rules and excessive regulations full time will not be twiddling their thumbs wondering what to do!
Do not forget the tax burdens of SMEs
The administrative burden of running a business weighs more heavily on small and medium enterprises (SMEs), which often lack the internal resources to conform to the multiple rules and measures that apply to them. Even by reducing the administrative burden of businesses, SMEs could still be at a disadvantage. An excellent way to compensate them for these costs is to reduce their tax burden.
Currently, the federal tax rate for SMEs is 11 per cent (compared to 15 per cent for large businesses starting next Jan. 1). A certain political party was just proposing to reduce this rate to nine per cent during the last election. That party is… the NDP! Indeed, even if we are talking about business taxes, economists have established that in fact, it is mostly workers who pay for business taxes through lower salaries than they would otherwise have enjoyed.
The opportunity is there for the Conservative government to take up this NDP promise and make it their own. Indeed, in this matter, the Harper government should just outright collaborate proactively with the Official Opposition.
Michel Kelly-Gagnon est président et directeur général de l’Institut économique de Montréal.