The province is looking to crack down on under-reported income in Ontario by introducing a new law requiring the mandatory use of electronic cash register systems.

But Nipissing MPP Vic Fedeli calls the move another strike against businesses, especially small, home-based ones, that can’t afford the additional expense.

“It’s an assault against business. That’s all it is,” says Fedeli, suggesting the new rules – under the Revenue Integrity Act – send a message to businesses that they’re not trusted by Premier Kathleen Wynne and her government.

Fedeli says the new law wasn’t previously discussed, but has been included as measure in the Liberal government’s budget bill, which is expected to be debated early next month.

Fedeli says it will require that “prescribed businesses” record all sales transactions in an electronic cash register that meets “prescribed requirements” and to transmit the sales information to the minister (of Finance) within a “prescribed time, manner and form.”

A spokesman for the Finance Ministry says the new rules are aimed at preventing electronic sales suppression, which involves manipulating point-of-sale systems to hide sales and under-report income.

“When businesses under-report income, they avoid paying their fair share of taxes. This puts the competitiveness of legitimate businesses at risk, and gives those not paying their fair share an unfair advantage,” says Scott Blodgett. “Ontario loses approximately $500 million each year in tax revenue to electronic sales suppression — revenue that should be supporting the public services people count on like hospitals, schools and roads.”

Blodgett says Ontario has introduced new laws that, if passed, would require businesses to update their electronic cash register systems to stop the practice of hiding sales.

“Businesses will be consulted in the coming months as the province develops regulations to identify which businesses would be subject to the new laws, determine timelines and set out other implementation details,” says Blodgett. “The government is committed to solving this problem in consultation with businesses and to making the transition as easy as possible through a reasonable transition period, and will consider financial or other supports for affected businesses.”

Fedeli says he has questioned ministry staff on the matter and was told the province is looking at using the same guidelines that apply to HST registration, collection and remittance. That would mean all businesses with taxable revenues exceeding $30,000 annually would be impacted.

Fedeli says he’s also asked around about the cost of electronic cash registers and has been told they’re priced in the neighbourhood of $3,000.

“As if having to buy a $3,000 electronic cash register for your home hair or tailoring business isn’t enough, if the government suspects you’re not using the proper register, you can expect them to get a warrant and enter your home,” he says, suggesting failure to comply is expected to carry a fine of up to $10,000.

Fedeli says the vast majority of Ontario business owners are honest and hard working.

“It’s just unnecessary,” he says, of the proposed new law.

Peter Chirico, president and chief executive officer of the North Bay & District Chamber of Commerce, says he recognizes that the move is an attempt by the government to “thwart the underground economy.”

But he says the problem is that people who pay their taxes faithfully are now going to be burdened with another cost.

“We need to eliminate those,” says Chirico, of added costs for businesses. “The majority of business people are honest and pay their taxes.”

He says startups and entrepreneurial businesses will likely be hurt the most by the added costs.

Chirico says he doesn’t know how just how expensive the costs associated with the proposed new law will be. But in addition to purchasing an electronic cash register system, he says there’s likely to be upgrades down the road, including specific software that will meet the government’s requirements.

Chirico says many businesses likely aren’t yet aware of the proposed new rules and suggests there will be some backlash.