Underground economy worth billions

Sep 21, 2012 | Biz/Tech, News

Compiled by Helen Surgenor

Canada’s underground economy was worth up to $35 billion in 2009, said Statistics Canada—and that doesn’t include revenues from illegal operations, drugs or prostitution.

According to the report, “the three most significant sectors in terms of underground economy activity were construction (29 per cent), retail trade (20 per cent) and accommodation and food services (12 per cent).”

The 2009 net income of non-farm unincorporated business was valued at $9.7 billion. SOURCE: Statistics Canada, Estimating the Underground Economy in Canada, 1992-2009, September 2012. GRAPHIC BY HELEN SURGENOR

The majority of the underground construction economy comes from employers who are able to under-report their earnings by listing their workers as ‘independent operators,’ said the Ontario Construction Secretariat in a July 2010 report.

Underground retail trade can be attributed to the skimming of profits by retail outlets, as well as the illegal sale of liquor and tobacco, the report said.

Underground tobacco activity made for 18% of personal tobacco expenditures in 2009. SOURCE: Statistics Canada, Estimating the Underground Economy in Canada, 1992-2009, September 2012. GRAPHIC BY HELEN SURGENOR

The Stats Can report puts revenues from contraband tobacco at approximately $1.6 billion— money that could be affecting public safety.

“The public needs to be aware that profits from illegal tobacco products are also funding other criminal activities, such as drug and gun trafficking,” according to a statement on the RCMP website.

The economy of hidden rent— skimmed and unreported income from rents— outgrew the total Canadian Economy between 1992 and 2009: it increased by 200 per cent.

Illegal rents and tobacco sales account for millions of dollars in Canada’s underground economy. SOURCE: Statistics Canada, Estimating the Underground Economy in Canada, 1992-2009, September 2012. GRAPHIC BY HELEN SURGENOR