Industry Committee on April 13th, 2021

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

I'll ask Ms. Jones another question.

The red tape creates such a heavy burden for SMEs that they're forced to increase the price of their services. We could reduce the administrative burden on SMEs by significantly increasing the revenue threshold for collecting sales tax. This threshold was set at $30,000 in 1991. What are your thoughts on this?

[Laura Jones]

If I understand the idea correctly, it would be fewer charges for smaller businesses, less burden for smaller business—a divide.

Certainly we should do everything we can to keep the regulatory burden reasonable for all businesses, and there are certain areas where as you grow there may be a need for more regulations and some of those regulations and the burden associated with them could be limited to bigger businesses. You see some of that in the system, but there's probably opportunity to leverage that more than we do currently.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

I want to bring up another issue related to small businesses, and particularly family businesses. You have taken a position on Bill C-208, by stating in particular that the current rules in the Income Tax Act discourage the sale of a business to a family member. The House is expected to begin consideration of the bill at third reading on May 10.

Why is the passage of this bill important to the Canadian Federation of Independent Business?

[Laura Jones]

We need to do everything we can to make it simple to pass on businesses to family members. Certainly, to make it fair, we need to ensure that it's not more expensive to do that, to sell to a member of your family than to sell outside your family, and that those successions go well. I think this is particularly true given where we're at demographically in Canada with a large number of these successions going forward.

That's why I think it's just common sense.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I have one last question for you.

The software that businesses use to file their taxes seems to be an issue. Is this because the federal government doesn't have access to the same software? Does everything need to be converted to a new software?

[Laura Jones]

I think this is one of the recommendations we're making that's very simple. If you're using existing software, just allow that to work with the back end of the government's software, instead of taking what you have in the software and then having to reinput it into the government software. Again, common sense says we should just be doing it. What's the problem?

[The Chair, Liberal, Sherry Romanado]

Thank you.

Our next round of questions goes to MP Masse.

You have two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

Ms. Jones, I asked you a question with regard to the bad actors and how to deal with that, and you didn't really get a lot of time to answer. You did talk a little bit about some of the innovation necessary for that and I'd like to have you conclude your remarks there, if you do have some additional comments about that.

[Laura Jones]

I would love to see us get away from having the lowest common denominator dictate the regulatory burden for all businesses. I think that it's very destructive, not just directly for the businesses but for all Canadians, because it undermines our economic growth and our productivity, our prosperity. These are things that are always important, but I think coming out of COVID-19 there's an extra importance on making sure we're doing everything we can to get back to a prosperous economy.

What does that take? Again, I said that technology can help with this. There are instances where we can use AI to determine the risk. I think we could do a much better job of giving businesses and individual citizens with good track records with government compliance a lighter touch when it comes to things like auditing. They can earn that and then have that good grade, and then there are ways to focus on the highest risks for Canadians and who the higher-risk actors are, the ones we need to pay attention to, maybe auditing them a little bit more. When we do that, health and safety outcomes will be improved across the board.

[Brian Masse, NDP, Windsor West, ON]

Madam Chair, do I have any more time?

[The Chair, Liberal, Sherry Romanado]

You have 45 seconds.

[Brian Masse, NDP, Windsor West, ON]

I'll cede that.

Thank you, witnesses.

[The Chair, Liberal, Sherry Romanado]

Thanks so much.

Our next round of questions goes to MP Baldinelli.

You have five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

Thank you to all the witnesses for being here today.

I'd like to quickly go to Ms. Jones first. I was actually looking at the “Canada's Red Tape Report: The Cost of Regulation to Small Business”. As we've reviewed, and you've indicated, of the $38 billion that's spent on regulatory burdens, 28% of that is in red tape alone. I notice the report talked about how you've actually seen that time spent on regulations by owners going down since 2017, but in fact that could be because of cost, that small and medium-sized enterprises are actually moving that burden by hiring consultants and other companies to do this for them.

I was wondering if you could follow up with an indication in terms of cost. Would you have information associated with that?

[Laura Jones]

You're absolutely right. For the burden in some areas we're seeing a slight decrease, but our measures are fairly broad and aggregate, so I would say, at best, we're holding ground. What we do know is that sometimes these things shift around. For example, as things get more complicated, you might have chosen to do some of your accounting yourself, but now you're going to have that go to an accountant or your legal fees will go up because you need legal opinions. Again, these are the ways in which the burden falls more heavily on smaller businesses, because they don't have entire departments associated with that. The business owner himself or herself is doing a lot of the compliance. We know that from our other studies.

We also know that they tell us that if they were spending less time on this, they would be doing a better job serving their customers, they would be investing more time in training staff and they would have more money to increase wages. These are the kinds of things that they would do if they were not spending more time. Many of them also say they would take the opportunity to get home a little earlier to spend a little more time with their own families.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Following up on that point, further in the report you talk about the notion and the survey with regard to productivity and reinvestment back into businesses. I was wondering if you could highlight some of those, not only federally but also provincially. It's huge, in terms of reducing those burdens, to have those small and medium-sized businesses quickly inject more strength into the economy by investing in their businesses, by being more productive.

[Laura Jones]

It's the number one answer to the question of what you would do if there were savings there. It would be to invest in your business, and you have over half of businesses saying they would have more to invest, which directly affects productivity for the sector.

Again, if we even come up a level from there and ask why that is important, let's remember that Canada's small and mid-sized businesses provide over half of the private sector jobs in our economy, and they've been absolutely hammered by COVID-19. They're important at the best of times, but we are not in the best of times for these business owners. When we ask them what they need for recovery, the tax burden is number one. By far and away, do no harm on the tax side, but very close, or a little bit behind that—not as close as it sometimes is—in the number two spot is reducing the burden of red tape. I think we can't underestimate how important this is for our country going forward.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Ms. Jones.

Perhaps I'll go to Mr. Vaillancourt to talk about changes to the Competition Act, and as he's indicated in discussions, the notion of budgetary constraints. I believe even the commissioner himself has said resources have plagued the tribunal and the bureau. Regarding an ultimate review, I think there could be a consensus of opinion that it's time to look at the Competition Act.

In terms of that, are there any thoughts with regard to...? My one colleague mentioned earlier about section 96, as well as possibly an update to section 103.1. Are there any other changes that you think could be required?

[David Vaillancourt]

None that are top of mind at the moment. I think I've covered the main ones I think are due for a change.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Great. Thank you.

Madam Chair, I think that would probably take my time.

[The Chair, Liberal, Sherry Romanado]

Yes, you only have about seven seconds. Thanks so much.

Our next round will go to MP Erskine-Smith.

You have the floor for five minutes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

I want to pick up where my Conservative colleague just left off.

Mr. Vaillancourt, you have principally focused on extending the purview of section 103.1 beyond sections 75, 76 and 77 to section 79 and the abuse of dominance. What about section 81 and delivered pricing?

[David Vaillancourt]

As I understand it, there's never been a proceeding under delivered pricing. To be perfectly honest, because of that my familiarity with the section is kind of limited.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

I understand. The focus on abuse of dominance is because it has been the most heavily requested, but there has been great inactivity.

When it comes to early July of last year, we had the National Grocers Association in and they inexplicably talked about communicating with one another about reducing wages during the pandemic. I note that Sobeys, to their credit, has reinstated pandemic pay.

Would you support updating our wage-fixing laws? I know it would be a per se criminal offence in the United States, from my understanding of guidance there. Would you support that measure here?

[David Vaillancourt]

When I read in the news that consultation had happened, it was surprising to me, particularly given the issues in that industry with the bread price-fixing problems they have right now. It was a little bit of a surprise to hear that revelation.