Under-the-table residential construction worth $12-billion a year: StatsCanCanadian Contractor Financials Business canada Product
Residential construction is 28.3 per cent of the total $42.4-billion underground economy in Canada
Canadians spent $42.4-billion in underground economy transactions in 2012, StatsCan says in its latest report on the practice, released yesterday.
And residential construction is the highest contributing industry, the agency says, pegging the dollar volume of unreported transactions in our sector at $12-billion, or 28.3% of the total underground economy.
The residential renovation and repair business is worth $63.4-billion, according to a report last year from TD. $12-billion in underground transactions would represent 20 per cent of that amount.
Many media reports in recent years have given the impression that the underground economy is rapidly increasing in Canada – a reaction to increased taxes and fees. But the underground economy, according to the StatsCan report, is not actually changing much. It has been roughly stable, at about 2.5% of the Gross National Product, plus or minus 0.2%, since 1993. In 2012, the last year reported, the underground economy in Canada was worth 2.3% of GNP.
Dan Kelly, president of the Canadian Federation of Independent Business (CFIB), was quoted in the Toronto Star as saying that government crackdowns on the underground economy have been based too much on “squeezing above-ground businesses” which are easy to find and audit. Government needs to go after the true underground operators, Kelly said.
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i totally agree with Dan Kelly. we have been audited by Revenue Canada twice over the last 20 years. the only thing they can find is on the personal use of our vehicles. they don’t believe that 90% use for business is legitimate, event though we can show through our log.
obviously we are running a legitimate business.
it is tough to do business for cash as there isn’t an incentive for me to do that. we pay the taxes when we buy the product and on labour. the customer is just reimbursing us what we pay on their behalf.
When I price a job I have to include workers comp,liability insurance, builders risk, property taxes and insurance on my office and work shop.
Then I pay income tax on the wages and profits . Now compare that to the guy who works out of his trunk and may be collecting comp and working for cash and not paying any of the above. The government now makes builders carry comp on themselves and if an accident occurs probably would never be allowed to collect because it may categorized as an existing injury that happened before we payed comp on ourselves as employers. Instead of actually searching out those who always work for cash legitimate tax paying builders are made to pay extra fees by the gov’t to subsidize the under ground economy.
So how does Statscan know how much is being done under the table? If they know, then someone should be able to go after the contractor doing the work as well. Someone has to be admitting they are having work done for cash.
That’s a good question. But StatsCan, of all people, has these rocket-science PhD’s in applied statistics that can extrapolate national data in ways that ink-stained wretches like me can’t fathom.