NCPA - National Center for Policy Analysis

Red Tape Costs Canadians C$103 Billion

August 23, 2001

Canadians spend C$103 billion annually (12 percent of Gross Domestic Product) to comply with federal, provincial and municipal regulations, according to a new study from the Fraser Institute.

Government regulation hits pocketbooks as surely as taxes do but there is scant information available about its cost.

  • Between 1975 and 1999, over 117,000 new federal and provincial regulations were enacted, an average of 4,700 every year.
  • Over this 24-year period, federal and provincial governments have published over 505,000 pages of regulations contained in volumes that measure 10 stories when stacked.
  • In the fiscal year 1997-1998, all levels of government in Canada spent a total of C$5.2 billion administering their regulatory activities.

Federal administrative costs increased by 50 percent in real terms between fiscal years 1973-74 and 1997-1998. Provincial and territorial administrative costs of regulation increased by 80 percent in real terms over the same period.

  • The cost of complying with government regulation totaled an estimated C$103 billion in 1997-1998.
  • These costs are borne largely by consumers since businesses pass on much of the cost of regulatory compliance as higher prices for goods and services.
  • In 1997, regulatory compliance cost individual Canadians an estimated C$3,425 or C$13,700 per family of four.

The embedded cost of regulatory compliance exceeds spending on every item except shelter in Canadian households' after-tax budgets.

Public disclosure of the cost of regulation in Canada should be on a par with public disclosure of taxes say the authors.

Source: Laura Jones and Stephen Graf, "Canada's Regulatory Burden" Fraser Forum, August 2001, Fraser Institute, 4th Floor 1770 Burrard Street, Vancouver, B.C. V6J 3G7, Canada, (604) 688-0221.

 

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