Steve Payne
55% of Canadians would prefer to pay contractors cash: survey
Canadian Contractor home improvement contractors home renovation companies home renovation contractorsSo, in effect, more than half of your customers are very likely to prefer to do business with a "Mattress Bank of Canada" competitor, instead of you, if you insist on being above-board with them. Thanks, taxman!
Slightly more than half of all Canadians (55%) would do under-the-table deals with home renovation contractors, according to a survey conducted for H&R Block.
“When presented with two quotes from a contractor – a cheque payment or a lower cash payment with no tax – 55 per cent of Canadians said they would opt for the cash option because there was no sales tax,” H&R Block reports. The online survey of 1,500 adults was done by Leger Marketing, a polling firm, from July 30 to Aug. 1.
And that 55% statistic is probably going to increase, if some of the other numbers reported by H&R continue to hold up in the years ahead. For example, only 17 per cent of people aged 18 to 34 said it was wrong to pay cash to avoid paying sales tax. Across all age groups, only 30 per cent of Canadians thinking paying cash to avoid sales tax is wrong.
Statistics Canada reported last year that the underground economy in Canada reached $36 billion in 2008.
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I live an honest life and I refuse to do cash work. But I am darned tempted. I used to win about a quarter of the quotes I gave out. Roughly 100 to 150 of the four or five hundred I gave. Now I win about a tenth. It was bad enough having to compete with the cash guys, but when our province almost doubled the tax rate for renovations that was almost the end of us. I cannot even come close to competing against the cash guys.
An average quote for me is around $5000, taxes in, for residential roofing. I am constantly losing the bids to guys who give quotes for $3900 or $4000.
After 26 years of doing pretty well in this business I am sinking. I am at the point of not wanting to waste my time giving quotes anymore. And it is a direct result of the tax man’s greed. The proof is that the cash guys are so busy they can’t take any more work this season or they won’t be able to get it all done before the snow flies. And we are about to shut down for the season because we will be out of work in a few days even though there is 2 or 3 months of season left.
So I say a sarcastic THANKS A LOT to the geniuses in our government who are crippling legitimate contractors, allowing the cash guys to get rich, and losing a fortune in tax dollars. So yeah they’re collecting a higher percentage for taxes, but are now only collecting it from a handful of consumers. The cash guys in my city are laughing their heads off while I sink.
It was only a matter of time this would happen. I think most contractors in all trades new this was going to happen when the hst was introduced. The government was clamping down on the underground economy and it seemed that cash deals were on the decline.
I am legitimate and when competing against smaller contractors who don’t have proper insurance, WSIB etc… and continually work for cash, it is extremely hard to compete. As the Canadian economy continues to worsen, the underground economy will continue to flourish at a very alarming rate. The government didn’t really think this tax through when implementing tax on labour. The goevernment is practically encouraging this behaviour.
Hello
I absolutely agree with above comments as I am a home renovator north of the gta and have found that i do ten qoutes I only get 3 or 4.
This is deffently do to this tax hike and cash deals, I follow up on each quote and customers are telling me that they have found a price lower than mine, I can’t understand it, example, qouted deck materials come in at 2800.00 including permits and gave deal for labour at 1500.00 I estimated job to take me 3 to five days, at this price this was a great deal compared to what I was able to charge before economy and hst, I would make 2000.00 to 2500.00 in labour.
Followed up with this customer and he says he went with some one else that is able to do everything for 4000.00 tax in! Did not mention if he had plans done as deck was 4′ of the ground!
I guess this is just how the business is going regardless of all this guys on TV saying hire professionals and obtain permits, confirm if they have all insurance and so on, I personally don’t believe that most people even care as long as they are saving money.
Any way I am going on and on and could go on for hours about this topic.
It’s not and easy business and I feel my dreams of being a honest and reputable contractor is going down the drain with these un honest trades people!