Scathing CRA Report Confirms Billions Lost in the Underground Economy

Date: 
Monday, June 05, 2017

A report released by the Canada Revenue Agency on Friday confirms Canada's personal income "tax gap" hit $8.7 billion for 2014 – a large portion of which comes out of the underground economy.

The BC Building Trades has been calling for action within the construction industry for years.

“The underground economy is rampant in construction,” said Tom Sigurdson, Executive Director of the BC Building Trades. “This goes way beyond paying for a plumbing repair with cash. This is thousands of undocumented and misclassified workers working on some of Vancouver’s largest construction projects.”

The Canada Revenue Agency report found that the tax gap represents about 6.4 per cent of all personal income tax collected in 2014.

“It's difficult for fair contractors to compete against this level of underground activity,” added Sigurdson. "While legitimate contractors pay Employment Insurance, WorkSafeBC premiums, and CPP contributions, unscrupulous contractors not only pay less cheating the workers but also cheat on paying these other contributions, leaving all of us paying more.

The BC Building Trades is calling for enforcement through Underground Economy Compliance Teams.

In 2000, the provincial and federal government partnered to form Joint Compliance Teams composed of agents from the Employment Standards Branch (Province of BC), Canada Customs and Revenue Agency (formally Revenue Canada) and the Human Resources and Development Commission (Government of Canada).

Over the course of nine months, the teams visited 400 residential construction sites and identified over $44.5 million in lost taxes and a similar amount in lost WorkSafeBC premiums.

“It’s time to move beyond studying the underground economy and take action.”

For More Information: 

Contact the BC Building Trades office
(778) 397-2220

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