Strengthen employment laws in construction
Holding contractors to account could save billions, Derrick Schulte writes.
Do you wish your city or town had more money for important services? Wouldn't it be nice if we could find more revenue to pay to fix potholes, retrofit schools, equip firefighters and address the needs created by the COVID-19 pandemic? I think we all agree that would be great.
Well, our municipal, provincial and federal governments are losing out on billions of dollars every year because of tax cheats from unscrupulous contractors in the construction industry. We all pay our taxes, why shouldn't they?
There is a growing number of construction contractors that are cheating their workers and stealing jobs away from honest contractors. But they don't stop there. They are also taking taxpayers to the cleaners. That affects all of us and our communities, and it isn't fair.
The billions that are lost each year could be used for essential services, improvements to infrastructure, frontline workers and more.
According to Statistics Canada, the underground economy accounted for
$61.2 billion in economic activity in 2018. The largest slice of Canada's underground economy activity in 2018 came from the residential construction industry (26.2 per cent or $16 billion). In Alberta, the underground economy, which includes residential construction, retail trade, and accommodation and food services, is estimated to be worth $5.8 billion.
More and more contractors are using subcontractors that operate in the underground economy. Sometimes an employer tells workers they are “independent operators” when they are no different from a regular employee.
According to the Canada Revenue Agency (CRA), there are only two parties in a work relationship: the employer and the employee. As such, these so-called “independent contractors” often end up getting caught by the CRA, which identifies them only as an employee. This then means these same contractors might end up working only for cash, which means they aren't paying into programs like the Canada Pension Plan, employment insurance or workers' compensation. By not paying into these programs, it also enables them to undercut legitimate contractors when bidding on jobs.
This is not just about ripping off the government. The cheaters win lowball bids for construction projects while honest contractors live by the rules and have trouble competing. Guess who pads their pockets in that scenario?
And what it all leads to is shady operators profiting more while the rest of us have fewer resources to fight COVID-19, to make our schools safe, repair roads and bridges and support veterans and first responders.
Law enforcement needs to be given the tools and leadership to do their jobs, and contractors need to clean up their act. We pay taxes and so should they.
The Alberta Regional Council is working to lobby government and strengthen our employment laws. Beefing up enforcement to fight against it is also critical because fraud has, over decades, become a standard business practice in the construction industry.
With tax returns due
April 30, it's time for all of us to stand up against tax fraud in the construction industry. The Alberta Regional Council and our members will also be participating in the United Brotherhood of Carpenters' Tax Fraud Days of Action campaign from April 14-17 to help raise awareness on this issue. To learn more, visit at albertacarpenters.com/ taxfraud