Hootsuite CEO criticizes controversial tax changes
SEATTLE— The head of one of Canada’s best-known tech darlings says Ottawa’s proposed changes to small business taxes could hamper innovation and prevent Canada from becoming a hotbed for technology giants.
“I’ve been an entrepreneur and a small-business owner for a large part of my career, I know that a lot of those businesses operate on the margins,” Ryan Holmes, CEO of social media management platform Hootsuite, said in an interview at the Cascadia Innovation Corridor Conference.
“I would encourage the government to look very closely because . . . it is causing a lot of concern to business owners,” he said.
In mid-July, the federal government released a three-pronged plan to end several tax provisions used by some small businesses.
One provision at risk of being eliminated is income sprinkling, a practice that permits business owners to lower their taxes by passing income to family members, even those not active in the business, who are in lower tax brackets.
The government is also proposing limits on the use of private corporations as a way to gain tax advantages when making passive investments, and limiting the conversion of a corporation’s regular income into capital gains that are typically taxed at a lower rate.
If the government wants to have more head offices in cities such as Vancouver, Holmes said, that won’t happen by convincing established companies to move to the West Coast as that involves significant cost, among other issues.
“If we want to get more head offices there we need to create more Hootsuites,” he said. “I think you need to be very favourable at the small end of the market.”
Those startups can become big businesses with large, local headquarters. Hootsuite, which launched in 2008, now employs close to 1,000 people in Vancouver and several offices abroad, according to its website.
Hootsuite CEO Ryan Holmes says the changes would slow innovation.