Sharing Economy Regulation: The Federal Government Level
Welcome back everyone to part 2 of our Anatomy of Common Sense Sharing Economy Regulations series.
Last week we discussed the benefits of the sharing economy, not the least of which is that it supplements people’s income by 15% a month. Further, the sharing economy is crying out for common sense regulations that allow people to make money from assets they own.
In short, the sharing economy is here to stay and we as a country need to get on board or risk getting left behind as the innovation train leaves the station. Ignoring this trend also sends it underground, which isn’t good for anyone involved.
Today we are going to discuss the Canadian federal government’s role in this whole sharing economy business. Think there isn’t one? Think again!
Federal Governments Worldwide: A Quick Benchmark
The European Union (EU)
The sharing economy landscape is already complex, so no one advocates for a fragmented regulatory patchwork. To such an end, the EU recently released an official communication, titled “A European agenda for the collaborative economy”.
This document provides guidance on how current EU laws affecting the sharing economy should be interpreted across Europe. A good start, at least there is involvement and acknowledgment!
The United States (US)
On June 3rd, the US Department of Commerce (USDC) released a report on the sharing economy. Here, the report outlined such benefits as reduced consumer prices, news forms of business, better use of idle assets, and flexible employment opportunities.
The report concludes that the USDC will expand efforts to collect more data on this new form of employment, which will inform better decision making in the future.
The central government in Italy recently unveiled an interesting tax plan whereby a specific fiscal category for sharing economy workers is to be created. Here, earnings will be taxed at a flat 10% rate up to €10,000 per year. Beyond this, your marginal tax rate will apply.
This is positive because it covers the majority of mom-and-pop sharing economy workers who use this new tool for income supplementation only.
The United Kingdom (UK)
The UK is also making a clear transition to support the sharing economy. In their 2015 budget, the UK Government declared their intention to make the UK the “global centre for the sharing economy.”
So other countries are acknowledging, studying, and addressing the burgeoning sharing economy. What are we doing here in Canada?
Canada’s Federal Government: A Quick Summary
Other than the Deputy Ministers’ Committee on Policy Innovation report from 2015, we haven’t seen much life in this debate at the federal level in Canada. So where can we start?
It was promising to see our Minister of Innovation, Science and Economic Development, the Honourable Navdeep Bains, deliver “the keynote address at a breakfast event on innovation, security and the sharing economy in North America.” We’ve got tacit acknowledgment so far.
On the other side of the isle, the Conservative Interim leader Rona Ambrose appointed Member of Parliament Alex Nuttall to take on a newly established shadow cabinet post as sharing economy critic.
OK, so we’ve got acknowledgment and some addressing of the issues. But as of Summer 2016, this is about where our Federal story ends.
Recommendations for Canada’s Federal Government
So where can we go from here? We believe there are 3 broad areas the Federal Government can play a role in the growing sharing economy.
1. Encourage Understanding and Discussion
Much like in the UK, the Canadian Government should encourage the creation of a sharing economy industry group or trade body. This will help sharing economy businesses self-organize in order to speak collectively on common concerns.
In addition to this, the Federal Government should fund ongoing research and help convene other levels of government to talk about this new business model.
2. Legislation and Federal Government Functions
Core government functions such as taxes, labour laws, and social benefits is where the Federal Government can play the most important role. We have broken down this section into 9 separate recommendations.
- The government can open up discussion re-examining labour laws and worker classifications. Surely our industrial revolution era worker classification systems no longer apply to new flexible work realities.
- Help enable flexible benefit packages where multiple employers can contribute to a single employee’s benefit basket.
- Work with the insurance industry to facilitate flexible insurance coverage options for sharing economy workers.
- Help make sharing economy work more accessible to the unemployed, and newly arrived Canadians.
- Study the impact of this new employment category on employment insurance and government-run old age benefits.
- Help create specific tax policies and guides for this new army of micro-entrepreneurs. Consider also tax exemptions for certain income amounts. For instance, the UK federal government has waived the first few thousand dollars of sharing economy income. So too has Italy. Because the foundation of the sharing economy is premised on technology, the government will find it easier to track and enforce tax adherence once cooperation with sharing economy marketplaces has been attempted and established.
- Consider the role of the sharing economy in emergency preparedness. Surely there are ways to capitalize on the hundreds of thousands of vehicles, spare rooms, and freelance workforce in times of crisis.
- Explore the role of Industry Canada in enabling micro-entrepreneurs and Canadian sharing economy startups.
- Lastly, the Competition Bureau of Canada can play a role in supporting common sense regulation at all levels of government. They’ve already been actively vocal in the Uber debate, and have made some worthwhile recommendations.
3. Federal Government Operations
Finally, we should consider opportunities to involve sharing economy principles into government operations. This is already occurring at the municipal level with websites like MuniRent that allows local governments to share expensive assets.
At the federal level, for instance, we should be exploring how federal employees can leverage sharing economy platforms such as Uber and Airbnb for more economical business travel.
Conclusions, for now
We often hear noise surrounding the sharing economy, mostly from what I like to refer to as obstructionists. But the fact that the Uber’s and Airbnb’s of the world are so powerful, without owning the physical assets they’ve monetized, tells us that something powerful is happening.
As you can see, there are a number of opportunities and legitimate roles for governments of all types, including at the federal level. So let’s get this discussion going.
Have we missed anything? Please leave your comments below for any other roles the federal government can fulfill in the new sharing economy.
As we increasingly see the lines between the personal and commercial blur, it’s time for all levels of government to act. And many have. Some more smartly than others. Now, it’s Canada’s turn.