Prosperity Restricted by Red Tape
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Prosperity Restricted by Red Tape
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The imperative to address red tape, however, is not just financial. Excessive regulation is unfair to small business. The smallest businesses pay five times more on a per-employee basis compared to larger businesses as they have many of the same requirements but none of the economies of scale. Among the smallest businesses, it is the owner doing most of the compliance.
For too long, governments at all levels have been largely oblivious to the negative consequences of too much regulation. Governments can affect behaviour in three main ways: taxing, spending, and regulating (hidden taxing). There is a high level of accountability when it comes to taxing and spending with government budgets detailing these policies fairly clearly. This is not so with regulation. Most governments still do not quantify the impact of regulation. Needless to say, this has created a big accountability deficit. But there is some hope. Since CFIB’s first report in 2005, governments across Canada have been taking the issue more seriously and starting to enact promising reforms.
For the business community, particularly small- and mid-sized businesses, the benefits are most obvious: less stress and more time and money to invest in the business. What does reducing red tape mean to the rest of Canadians? The entrepreneurship and investment that would be unleashed promises more job opportunities, higher wages, more tax revenue for health care and education, lower prices, and more money for charitable causes. It also promises better compliance with the most important rules and regulations as business owners are freed up to focus on important rules rather than unnecessary red tape. Finally, looking ahead, Canada is facing a big challenge with labour shortages. For both the private and the public sector, reducing unnecessary red tape will free up time—something that will be in very short supply—for more productive purposes.
