Real examples of ridiculous government rules in Canada

Small business owners share their tales of red tape pain   

Toronto, January 24, 2013 – Surveys about surveys, late fees for on-time payments and application overkill. If it makes absolutely no sense, then it must be red tape. Today, as part of Canada’s Red Tape Awareness Week, the Canadian Federation of Independent Business (CFIB) released its real-life stories of ridiculous government rules from across the country.

Business owners answer countless surveys from Statistics Canada. One day, fittingly, after completing two surveys in the same week, a small business owner got a third survey, asking how she felt about filling out government paperwork.

“This is exactly what we mean by red tape,” said Laura Jones, executive vice-president, CFIB. “Not the regulations that protect Canadians, but those rules, processes and government inefficiencies that place undue cost on businesses without serving any purpose.”

A diligent business owner sent the government a cheque on Oct. 12, 2011 that wasn’t due until the end of October. Unfortunately for him, the government waited until Nov. 11 to cash the cheque, and then sent the business owner a bill for late fees with interest.

“Small business owners feel like the government does not respect their time,” added Jones. “Time spent answering surveys or on hold waiting for information about regulatory requirements is time that could be spent with customers, making sales, or planning for the future of the business.”

Organic farmers in New Brunswick are partially reimbursed by the government for the cost of being certified organic. To qualify, they must go through a three-step process, including filling out a separate application form for the amount, even after the government has found them eligible for the reimbursement.

These stories illustrate a $9 billion problem in Canada. The latest Canadian Red Tape Report from CFIB estimates that it costs Canadian businesses $31 billion per year to comply with regulations from all levels of government, an amount that business owners believe could be cut by 30 per cent ($9 billion), without risking public health and safety.

“Red tape is not just a nuisance,” said Jones. “It’s a hidden tax that holds back our economy. The stories we are sharing today are only a small sampling of the headaches and waste that small businesses face every day.”

View the full list below. 

Canadians are encouraged to show their support for CFIB’s Red Tape Revolution by signing the petition.

For more information, please contact Gisele Lumsden at 416-222-8022 or by email at public.affairs@cfib.ca.

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.

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Passing the buck – The owner of a small health services company in New Brunswick takes on many different jobs with the business, including payroll. He recently got a letter from CRA, asking him to garnish an employee’s paycheque. Because it was a small, one-time amount, the business owner contacted CRA to confirm that it was correct. Usually employers are asked to garnish wages over months or years when an employee owes CRA thousands of dollars. The answer? No mistake. The amount? $60.62. CRA was having trouble contacting the employee and decided to make it someone else’s problem.

Gentlemen, Stop Your Engines – A custom airplane engine manufacturer in Ontario recently had to severely cut back production due to a case of the taxman blues. This small shop was audited three times in a 12-month span. Each audit took 2 days. At the end of the last audit, after six days of lost productivity and after disallowing a number of the business’ deductions, the CRA agent told the business owner, “You should be thankful we allowed you anything at all.” Yeah, thanks…for the red tape runaround.

Why do in one step what you can do in three? – The New Brunswick Department of Agriculture offers farmers a partial reimbursement of the costs of being certified organic. The amount is the same for everyone, $385. If you are an organic farmer, you complete the same three-step application process every year: First, you apply to the department for certification, and then the department confirms your acceptance and asks you to sign and return the contract. Once you get confirmation that the contract was received, you have to send a request for the reimbursement. Why three steps instead of one? Nobody knows.

Haircut hassle – In 2012, the Manitoba government thought it was simply giving businesses “a little haircut” by applying the PST to various personal services that had previously been exempt, including haircuts over $50. This little haircut gave salon owners a big headache. Many had to update their accounting systems and cash registers to calculate tax on some transactions, but not on others. Businesses had to figure out a way to comply with the new rules, register, update cash registers/systems, train staff and educate customers – all in a very short window.

The weakest link – You’re only as good as your weakest link, and sometimes for small business owners, that link is somewhere in a government office. One particularly diligent entrepreneur had to send a cheque for a government fee that was due Oct. 31, 2011. Having had experience with red tape, he dated the cheque Oct. 12, 2011, and put it in the mail that day so that there would be no late fees. Wouldn’t you know it? Someone forgot to cash the cheque until Nov. 11, and then had no qualms sending the business owner a bill for late fees and interest.

How do you feel about being asked how you feel? – Red tape sometimes transcends from the merely nonsensical to the patently ridiculous. Most business owners in Canada have grown accustomed to answering countless mandatory surveys from Statistics Canada. The owner of a home building centre in Ontario had to laugh out loud (or she would have cried) when she got her third questionnaire in the same week, the latest asking a series of questions about how she felt about filling out government forms. Truth is sometimes stranger than fiction.

24-hour red tape – A “doggie daycare” and grooming business heard from its customers that there was significant demand for overnight boarding. When the business owner applied for a license to operate after-hours, he was denied based on the fact that the business was in an industrial zone as opposed to an agricultural zone. He tried to explain that since the business was in an industrial park, there were no residents nearby that could be disturbed. If he were to move to an agricultural zone, he would be too far to be convenient for his clients. Logic got him nowhere. Every dog has its day…but apparently not its night. 

It made sense at the time – The owner of a business in Trois-Rivières, QC, was ordered to comply with a number of extra regulatory requirements specific to his industry and the location of his business. Requirements included filling out a monthly report on the activities of his employees, and paying a number of additional payroll taxes. These onerous requirements were originally intended to protect workers in certain industries from unfair treatment by their employers, but modern labour laws rendered the law obsolete. What might have been legitimate regulation in the 1930s has since turned into nothing but red tape. 

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