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Associations, Economic

Underground economy Days of Action officially launches

Don Wall
Underground economy Days of Action officially launches

Dishonest contractors who evade taxes, eschew safety training and exploit workers are costing Ontario taxpayers up to $3 billion per year in lost tax revenues, two trade unionists lament in the latest edition of The Construction Record podcast.

Carpenters’ District Council of Ontario president Mike Yorke and Millwright Regional Council of Ontario political director Chris Sutton were guests of host Vince Versace, national managing editor of the Daily Commercial News and Journal of Commerce.

The Millwrights and the Carpenters’ are spearheading an awareness campaign in Ontario as part of North America-wide Tax Fraud Days of Action set for April 14 to 17.

“This is one of the major issues in our industry,” said Yorke during the podcast.

“In Ontario it’s primarily driven by misclassification of workers as subcontractors, and so instead of being an employee with all the appropriate health care, tax and WSIB deductions they are characterized as independent contractors, and no one’s paying taxes at all.”

The latest figures available from the Ontario Construction Secretariat indicated that for the period 2013 to 2017, the Province of Ontario and the federal government lost between $1.8 billion and $3.1 billion annually as a result of contractors operating in the underground economy. This represented an increase of 30 per cent since the secretariat last assessed the losses in 2009.

Sutton noted this is the third year of the campaign in Ontario, but momentum was lost last spring as the construction sector grappled with COVID-19. The Millwrights and Carpenters’ are talking to politicians, engaging in traditional and social media campaigns and taking awareness messages right to jobsites, where union members are wearing stickers, erecting posters and engaging workers from other unions in discussions, establishing themselves as leaders on the issue.

“It takes away a level playing field,” Sutton said of the fraud. “When you have honest contractors out there paying their taxes and doing the right thing, the safety courses that we provide for all our membership both on the carpenter side and the millwright side…we spend millions of dollars a year on safety training, and proper training for our members.

“These crooked contractors that are working the underground economy, they’re not doing that.

“We’re letting all of our members know, when you suspect there’s a contractor out there not doing the right thing, that’s not following the rules, that’s supplying or supporting the underground economy, you need to do the right thing and report them.”

Yorke said the problems extend throughout the full spectrum of the economy and across the whole continent.

“It can be anything from some guy painting your basement, doing a bit of drywall off the books, off the record, and on the other end of that spectrum, you’ve got worker exploitation, you got human trafficking, you have people completely undocumented, workers or new Canadians, new Americans just being totally exploited,” he explained.

Yorke cites a proposed solution from Virginia, where the attorney general implemented a first worker protection unit, as worthy of study in Canada.

“That has specific responsibilities in this industry, it can investigate, it can prosecute abusers, and it also has an aspect of education of the worker around their rights,” said Yorke. “That to me is a model that I would like to be able to take to senior levels of government.”

The advocates are also calling on the Canada Revenue Agency to take aggressive steps and devote a team to investigate the tax fraud, co-ordinate with labour and employers and support law enforcement officials to stop the exploitation of workers.

Sutton noted that dialogue with politicians is likely to be well received because the underground economy plagues everyone — legitimate contractors, workers, communities and the government.

“Everybody needs to understand what is involved here and what this issue is,” he said. “Imagine what we could build if we got a grasp of this. That $3.1 billion does a lot of good things for communities all across Ontario and all across the country.”


Follow the author on Twitter @DonWall_DCN.

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