Industry groups want government to crack down on what they deem a tax-avoidance scheme
A group of officials representing Canada’s trucking industry held a joint news conference in Ottawa on Tuesday calling on the government to “stop the atrocities being inflicted on thousands of drivers” through a business model known as Driver Inc.
The Driver Inc. model involves a trucking company telling a driver who does not own a truck to register as a corporation and sell its driving services to the carrier, according to officials.
Canadian Trucking Alliance (CTA), Teamsters Canada, Quebec Trucking Association (ACQ) and several logistics operators said Driver Inc. is a tax scam. Employed by a growing number of companies, it uses misclassification of employees to avoid paying taxes and other withholdings.
“There are few rules for Driver Inc., just the ones they make up or cannot get around,” Scott Tilley, president of Tandet Group, said during the news conference. “It sounds not quite legal to me. It seems to be an unsavory bunch. We need to stop these atrocities that are being inflicted upon thousands of truck drivers in Canada through the Driver Inc. structure that has been allowed to begin to take over our industry.”
Officials are pressing the country’s Labour Program, along with the Canada Revenue Agency, to step up enforcement against Driver Inc.
John McCann, the national freight and tank haul director for Teamsters Canada, said another key issue is that Driver Inc. gives some carriers an unfair advantage over others, while abusing vulnerable workers.
“The key issue here is about fairness and assuring that all play by the same rules, so that no one employer is able to have an unfair advantage over another,” McCann said. “It’s about assuring that a vulnerable labor force is not taken advantage of simply because they just want an opportunity to work and support their families.”
Drivers who are being asked to file as corporations using Driver Inc. “are indistinguishable from regular employees, lack truck ownership, route choice, or any real degree of independence or financial risk,” according to a CTA news release.
“Drivers taking part in the Driver Inc. scam have a much harder time claiming employment insurance, overtime pay, vacation pay, severance pay, paid sick days, and other employee benefits accorded under labor legislation.”
Officials said they have been calling for action from the government to end the Driver Inc. practice for several years.
“The trucking industry is facing an existential crisis due to a labor abuse and tax avoidance scheme,” Stephen Laskowski, president of the CTA, said. “We need the Canada Revenue Agency and the Labour Program to tackle these issues with the enforcement resources this crisis needs. We need substantial audits on carriers involved in the Driver Inc. scam.”
The prevalence of Driver Inc. in the trucking industry increased 17% from 2018 to 2021, according to Laskowski.
The Canadian government has taken some steps to combat the use of Driver Inc. among carriers in recent years.
In 2021, amendments to Canada’s labor code went into effect making the intentional misclassification of employees illegal. Last year, the Canadian government proposed providing the Employment and Social Development Canada department with $26 million to combat employers using Driver Inc.
“In the fall economic statement, the government stated that it would bring forward $26 million for enforcement against Driver Inc. and that is a good start,” Laskowski said. “We are still waiting, though, for confirmation that indeed that funding has been approved.”
Driver Inc. cuts heavily into tax collections, according to one official.
“The Driver Inc. scam is costing governments at least $1 billion annually,” Marc Cadieux, president of the ACQ, said in a related news release. “That’s money that should be going to build our infrastructure and secure our social safety net, but instead is going into the pockets of crooked businesspeople.”
Canada’s Labour Program and the Canada Revenue Agency did not immediately return a request for comment.