TORONTO — The Ottawa Senators hockey organization will be put out of business if the province scraps a tax exemption allowing businesses to write off sports tickets, says team president Cyril Leeder.
Leeder says the decision announced Wednesday by Ontario's Liberal minority government is poorly thought out and clearly favors sports teams in Toronto.
The Maple Leafs, Raptors and Blue Jays could likely survive without the tax credit, says Leeder, whereas the smaller-market Senators would not.
"We need that to survive," Leeder said in a telephone interview. "We cannot have another whack to our ability to operate here. You could take away incentives in bigger cities in sports and those teams would find a way to make it work, but the ones that are not in the major markets won't survive."
Ontario allows businesses to write off up to 50 per cent of all tickets and luxury suites for sporting events and other live performances like theatre, concerts and fashion shows. Entertainment costs at night clubs, social clubs and sporting clubs are also deductible.
The tax deduction is an incredibly strong catalyst for Senators ticket sales.
All 120 leased luxury boxes at Scotiabank Place are occupied by corporations. Roughly 50 per cent of all season's ticket holders use the deduction as well.
"If they made all tickets, suites non-deductible, we wouldn't survive," says Leeder.
Both Ontario Premier Dalton McGuinty and finance minister Dwight Duncan say they are leaning toward scrapping the subsidy, which costs the government $15 million annually.
McGuinty said the government, mired in a $16 billion deficit, has been warned to get its fiscal house in order and can no longer afford to subsidize corporate entertaintment.
He called the tax break a "loophole".
"We're spending money in that sector for corporate boxes at sporting events," he said. "And my sense is in this era there's a better use for those monies. At another age in time we could have afforded that as a luxury, but now we can't. We've got to focus on our priorities."
Duncan described the move as one that would benefit ordinary people in the provincial capital.
"Hopefully Leafs tickets will become affordable for families," he told reporters, referring to the Toronto hockey franchise. "I know when a mom and dad take their kids out to a Leafs game, they don't get a tax break. So it's about priorities."
At $123.77, the Maple Leafs have the highest average ticket price in the 30-team league, according to Chicago-based sports information agency Team Marketing Report.
Ottawa's average ticket price, by comparison, is $55.51 – the lowest among all seven Canadian NHL teams.
Asked whether he thought ticket prices at Senators games were inflated, Duncan replied: "I've never been to a game in Ottawa actually."
Leeder said Duncan "should remember that there's more than one team in Ontario."
"I think that's the most disturbing thing here," he said. "We weren't consulted at all. We didn't get a phone call until five minutes before there was something released to the public. If you're really trying to find solutions, you would think you would talk to your constituents about where the solutions are."
"We pay a lot of taxes here in this province. A lot. And we're happy to do that but we just want to be treated fairly. And if we're not, we can't stay."
Meanwhile, the Progressive Conservatives put pressure on the minority Liberals by raising the issue of corporate tax cuts at Queen's Park.
The Liberals appear set to reverse course on the cuts, which are scheduled to fall to 10 per cent by July 2013. The rate is 11.5 per cent.
McGuinty was initially against lowering business taxes, but changed his position during his second term of government, saying lower taxes would improve the province's competitiveness.
Maintaining an 11.5 per cent tax rate could mean as much as $875 million more revenue for the government, according to the Liberals.
"We think we have already put in place a very competitive tax environment," McGuinty said Wednesday, without confirming he was cancelling the cuts.
He said the additional funds would help the government pay for its signature full-day kindergarten program, which will cost $1.5 billion annually.
"You don't want to compete (with other jurisdictions) just on taxes," he said. "We also want to make sure we have a highly educated and healthy workforce."
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