By Pamela Eadie
Small business owners surely felt stung after learning Mike Harris gave a tax break to professional sports teams, days before leaving office. It was yet another corporate welfare package. But this time, it was delivered by the very revolutionary who had railed against such largesse. Common sense prevailed when Harris’s successor Ernie Eves quickly overturned it.
This fiasco is reminiscent of then-industry minister John Manley’s hockey flip-flop nearly three years ago. After announcing a generous corporate welfare package for the Ottawa Senators, Manley quickly reversed the decision following a public outcry.
Critics in the media have focused on the underhandedness of the deal; the tax breaks were stealthily implemented during Harris’s last days as Ontario premier and some of Harris’ colleagues claim to have had no knowledge of it.
Others argue while the tax break was questionable, team owners do have a legitimate beef with the payroll-based tax for health-care services they don’t use. The Toronto Blue Jays argue that their players spend a significant amount of time outside of Canada, so the teams should be spared the tax.
But what about childless couples required to pay school taxes? Or traveling salespeople who, much like athletes, spend a large portion of their time out of country? Everyone pays taxes for services they don’t use. It’s the cost of a civilized society. Making an exception in one situation can only lead to countless other equally valid requests.
But lost in the finger pointing is the fact that professional sports teams are indeed businesses, and should be expected to run themselves as such. An often overlooked issue is the unfairness of Harris’ deal for sports teams, because it is an example of big businesses benefiting from corporate welfare. As the demands of much larger, much richer businesses are pandered to, small businesses without the leverage of national and civic pride are left in the cold.
This recent fiasco is symptomatic of a feeling of frustration that exists among small and medium sized business owners, towards government in general.
Centretown businesses felt the sting of government policy this past year when Ottawa City Council increased the rates of meter and lot parking in the downtown core, making it more expensive to shop there.
And last year restaurant and bar owners felt ignored when they argued the new smoking bylaw would harm business.
In September, the Canadian Federation of Independent Business, which represents 2,600 small and medium-sized business owners in Ottawa, released the results of a survey of Ontario mayors and councilors.
“It is apparent from the lack of interest in our survey that small business is not a priority at Ottawa City Hall,” said CFIB president Garth Whyte.
Small businesses face an uphill battle to become profitable. They contend with before-profit expenses like property taxes, unemployment insurance payments, and high overhead costs, without a large resource base to draw from. These businesses usually operate with a small profit margin that can easily be erased.
According to ESPN.com, in 2002 the Blue Jays had the eleventh highest payroll of 30 teams at almost $77 million for 29 players. It’s no wonder small business owners have a problem with tax breaks for a large business that pays each employee an average of $2.65 million, while the various levels of government seemingly ignore the concerns of small business owners.
Ernie Eves made the right decision by promptly reversing this atrocious favouritism towards an industry that doesn’t need or deserve to be exempt from taxpaying duties. While this move may not directly benefit small businesses, it at least soothes the sting from the slap on the face delivered by the Harris government.