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.

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