Flaherty rejects Ontario’s bid to axe sports-ticket tax break

The Ottawa Senators will live to skate another day, after federal Finance Minister Jim Flaherty on Monday shot down a request by Ontario’s Liberal government that, according to the small-market franchise, would have put it out of business.

BY LEE GREENBERG AND JASON FEKETE

TORONTO — The Ottawa Senators will live to skate another day, after federal Finance Minister Jim Flaherty on Monday shot down a request by Ontario’s Liberal government that, according to the small-market franchise, would have put it out of business.

Flaherty rejected a request by the province to end a tax regulation that allows corporations to write off half the cost of tickets to sporting events.

“I know the Senators are quite concerned about it,” he said Monday. “Listen, you know, we have much bigger issues than that and I was, quite frankly, disappointed that this was made into some sort of major issue or tried to be made into a major issue by the minister of finance of Ontario.”

The Senators had said the move would put them out of business. The 20-year-old franchise says the writeoff is integral to its business, with 100 per cent of luxury box lessees and 50 per cent of season-ticket holders using it.

“If they made all tickets and suites non-deductible, we wouldn’t survive,” Senators president Cyril Leeder said late last month.

At that time, provincial Finance Minister Dwight Duncan wrote to Flaherty asking for federal help ending the subsidy, which also applies to corporate entertaining at nightclubs, social clubs and sporting clubs as well as tickets to theatre, concerts or other live performances like fashion shows.

Ontario says the exemption costs the province about $15 million each year in foregone revenue. The province is carrying a $16-billion deficit and has been warned to cut spending or face nearly doubling that figure in five years.

“Ontario has fundamental budgeting problems. They have major spending problems that they’ve built up over the course of eight years,” Flaherty said Monday. “I’m just not into scapegoats. I’m not into side issues.

“I’m being lobbied constantly about golf courses, and people should be able to write off golf courses. Listen, we have serious issues in this country about sustainability of government programs, fundamental government programs. So I’m not about to do anything about golf courses or anything like that.”

Duncan and Ontario Premier Dalton McGuinty had questioned whether the writeoff, which they referred to as a loophole, was a worthwhile expenditure in the current fiscal context.

“It is not clear that taxpayers should be subsidizing certain business expenses for income and sales tax purposes such as private boxes and corporate seats at sporting events,” Duncan said in his initial letter to Flaherty.

The news will likely come as a relief to the Senators organization as well as its fans, although a Senators spokesman said Monday the organization would not comment on the latest development.

“Until we have had a chance to speak to the province and the feds we’re going to hold off commenting on this,” said Brian Morris.

Just days before, the Senators president called the provincial gambit “ridiculous” and speculated that while the larger-market Toronto Maple Leafs would have survived the move, the Senators would have been doomed.

Opponents of the writeoff call it an unnecessary subsidy that also distorts ticket prices.

McGuinty, who was unaware of Flaherty’s comments Monday afternoon, said he was open to changing his position on the tax writeoff.

“We will listen to them,” he told reporters when asked about the Senators. “We have not had any formal representation to my knowledge about how this would affect their business. But we’ve also said if not this, then what? What is it we might do to better address our economic challenge?”

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