Expenses write-off could help ease labour shortage: CBTU

Canada’s Building Trade Unions (CBTU) has a solution it believes will help solve Canada’s growing shortage of construction labour.

CBTU is urging the Liberal government to make changes to the Canada Income Tax Act so that construction workers can write-off their expenses incurred in travelling to and from work that is beyond an 80-kilometre radius from home.

“It is all construction workers,” said Sean Strickland, CBTU executive director, although his organization represents unions. The Skilled Trades Workforce Mobility Tax Deduction is being lobbied from both inside the House of Commons through a private member’s bill and outside by the CBTU.  So far, the CBTU and NDP members of parliament, who are promoting the tax deduction, have had little support from government. 

Strickland said the change is needed to “rebalance” those areas in Canada with an over-supply of construction workers such as Newfoundland and Alberta against areas such as B.C. and Nova Scotia where labour shortages are acute in the construction industry. While there are imbalances occurring between provinces, they are also evident in smaller towns where projects are less numerous than in larger urban centres.  

Strickland said as many as 130,000 individuals within the construction industry, who are now not gainfully employed or on unemployment, could be brought back into the labour stream if a tax break allowed construction workers to write off their travel and temporary living expenses.

 “We would also reduce our reliance on temporary workers,” he said.

Strickland said the change would also address what he sees as inequities in the system. If a supplier of a conduit sends an employee to a temporary work site that requires travel, the supplier writes off the travel cost, but if a construction worker is employed by a contractor on site to install that conduit, it is not a tax deduction although both employees may travel the same distance and from the same point of origin.  

As the system exists today, if the employer is not paying the travel and temporary housing costs, jobs in remote areas or a long-distance from the employee’s home are prohibitive to construction workers as the travel and lodging costs plus what the individual pay in taxes and unemployment insurance erode the pay pack. “There is no incentive,” Strickland said. As a result, those jobs go wanting for employees.

If the Act was amended to allow the write-offs, Strickland said there would be a wider labour pool, a reduction in unemployment payments, and more income tax generated for government. As well, there would be more journeymen in place to work with apprentices. 

The CBTU recently commissioned a report looking at the captured benefits of implementing a Skilled Trades Workforce Mobility Tax Deduction. The report, conducted by Hendry Warren LLP, indicates that the average expenses incurred by a construction worker during a temporary relocation is over $4,000 and that is the largest barrier to mobility. The report found that the federal government would save $347 million per year by implementing a tax deduction through increased workforce, EI payment savings and tax revenues. 

The private members bill, in this session known as Bill C-275, has repeatedly come up in the House of Commons in past years. This session, it has received first reading but is not expected to go further in the current COVID shortened sitting. It is the reason that Strickland is now lobbying the parties. “We have advocated strongly with the Liberals, the Greens, the Conservatives and the NDP.  But, there has been no firm commitment by government to date,” he said. “We feel that this is an important issue for Canada”.

It is an issue the several NDP members have continued supporting and doggedly tried to bring forward. “This has been an outstanding issue going on for years in the House of Commons,” said Scott Duvall, NPD representative for Hamilton Mountain (Ontario), who introduced the private members bill this session but said the issue was first broached in the House in 2008. 

“At one time it was supported by all the parties, except the Conservatives (under Stephen Harper) and they were the majority – so it failed,” Duvall said. The irony is that now Prime Minister Justin Trudeau was the opposition leader for the Liberals party, which at that time supported the bill, he said.  

Duvall said he is now bringing the issue directly to the Liberal’s ministers of finance and labour. “It will help so much the companies that are begging for skilled people,” he said.

While the Income Tax Act does allow individuals moving from one area to another permanently to deduct moving expenses, it does not recognize individuals who moving on a temporary basis and leave their families behind.  “People have families and mortgages to pay and if they leave their family behind they still have to pay for accommodation and food – it is a double cost,” Duvall said.

Duvall said one of the stumbling blocks within the Act is also the definition of a workplace. Temporary work sites, where an employee goes on a regular basis, are still considered a regular place of business for a company and not eligible for travel write-offs. 

“The construction worker would rather go to a job than sit at home and receive 55 per cent of his income,” said Duvall.

There also needs to be recognition for the long-hours, especially in summer, which construction workers can work as well as the varying weather conditions that impact their work environment.

“After working 12 hours, you don’t want them driving long distances to return home,” he said.  Construction workers may also be stranded in areas because of winter weather.