More thoughts on competing with cash operators, and what the government needs to do about it
Ottawa's Home Renovation Tax Credit not only stimulated renovation projects, it helped the government collect significant tax revenue it would not otherwise have received. It's high time such a tax credit system was installed permanently.
By Alec Caldwell
On February 12, 2013, I wrote about “working for cash, some thoughts” When a contractor has to add thousands of dollars of taxes onto a quote to a homeowner for renovation work, let’s be honest, who does not want to cut costs and circumvent that tax bill? While we all know cash jobs are fraught with dangers for consumers, especially when a job goes wrong, it seems that the cash economy is gaining more and more speed.
What is government doing about this? Nothing! Or so it seems to me. On the contrary, at least in my home province of Ontario, the government has been busy increasing costs for legitimate contractors, such as forcing self-employed contractors into making WSIB payments in Ontario – and sending them fee statements from the College of Trades. Meanwhile, they allow foreign workers into the country on work permits for cheap labour, yet have no exit plans when their permits expire. Many, we know, end up in construction as illegal workers, receiving low hourly rates. All of these items boast the underground economy and cause unfairness to those trying to raise the standards and work by the rules.
I believe the home renovation industry needs government to come up with a new approach, maybe some kind of incentives for homeowners to hire above-board, non-underground contractors. Whether it’s tax rebates or meaningful tax credits, we need to encourage the public to only use legitimate firms. This needs to be a long term plan, not a one-year fix. The increased tax revenue that would be collected, over the long term, would surely justify the expense of the rebates or tax credits, and the costs of administering and publicizing the program.
The problem with accepting cash as a contractor is, though it sounds good in theory, what can you do with it? You can’t invest it legally or openly spend it on big ticket items, without drawing attention to yourself and maybe the people over at Revenue Canada.
The industry needs to change. What do you think are ways to help solve this problem? Let us know here.
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