The government is allocating funds in the upcoming budget to combat a tax-avoidance scheme known as “Driver Inc.,” which the trucking industry has criticized as a $1 billion fraud. This scheme involves businesses misclassifying drivers as independent contractors instead of employees to cut payroll taxes.
As part of the federal budget to be presented on November 4, the Carney government plans to allocate $19.2 million annually starting from 2026-27 to address this issue. The funding aims to assist the Canada Revenue Agency in enhancing compliance efforts.
Jobs Minister Patty Hajdu emphasized the exploitation involved in misclassification, highlighting the impact on workers’ rights and the unfair advantage it gives to non-compliant companies. The minister stated that vulnerable workers, including newcomers to Canada, often bear the brunt of these practices.
The Canadian Trucking Alliance (CTA) has been actively raising concerns about the Driver Inc. scam for nearly a decade, with President and CEO Stephen Laskowski advocating for government action. Laskowski has warned about the escalating compliance crisis in the industry, encompassing issues such as road safety, tax fraud, and labor law violations.
The Bloc Québécois, ahead of this year’s budget, had urged for tax reforms to address Driver Inc., one of its 18 requests to the federal government. Transport Minister Steven MacKinnon acknowledged that the government’s response directly aligns with the Bloc’s demands.
The Bloc Québécois welcomed the government’s initiatives but stressed the need for further actions and proposed a formal inquiry into driver exploitation within the trucking sector. During a committee session, concerns were raised about the ineffectiveness of previous reforms in tackling the root causes of the problem.
Conservative MP Philip Lawrence pressed Minister Hajdu for a timeline on resolving the Driver Inc. issue. Hajdu attributed the misclassification practice to past deregulation and highlighted the importance of reinstating penalties for non-compliance to curb fraudulent activities.
The government’s decision to address the Driver Inc. scheme has been met with a positive response from various stakeholders, who view it as a crucial step towards ensuring fairness and transparency in the trucking industry.