Do companies like Uber, Handy fuel underground economy?

The sharing economy might be getting lots of buzz, but Kevin Hipkins thinks its just creating a culture of tax cheats.

Hipkins, president of Molly Maid, a Mississauga-based cleaning services company, says these new disruptive tech companies like Handy and Homejoy, funded through the deep pockets of venture capital, are not playing by the rules.

Because these companies consider the cleaner, handyman or furniture assembler to be independent contractors, theyre not employees, and therefore not subject to significant employer contributions for items such as employment insurance or Canada Pension Plan.

If we could wave a magic wand, we could bring down our costs by about 30 per cent, said Hipkins. And avoid all this messy tax stuff.

Molly Maid, with about 1,200 employees, operating in all provinces except Quebec, ends up at a disadvantage when it comes to its profit model, compared to these new companies, he said.

Taxation is a moral responsibility, Hipkins argued. I think we are creating a culture of tax cheats.

He concedes that cleaning services and cleaners have long represented a huge chunk of the underground economy some estimates peg it at more than $3 billion a year in Canada.

However, Hipkins believes theres a difference when its a small under-the-table arrangement between a client and individual cleaner, versus a large U.S. company, with millions in market capitalization.

He argues that the big company should be required to play by the rules.

Handy, which launched in Toronto last April and in Vancouver in June, says it is absolutely not evading taxes.

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Do companies like Uber, Handy fuel underground economy?