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Are High Taxes Shutting Canada's NHL Teams out of Stanley Cup Contention?

September 23, 2013
Are High Taxes Shutting Canada's NHL Teams out of Stanley Cup Contention?
  • The Leafs, Senators and Canadiens all rank among the bottom of tax competitiveness compared with other NHL clubs, while Calgary, Edmonton and Vancouver lead the way
  • Leafs would have cap space to sign RFA Cody Franson and an additional star player if they operated in a lower tax environment like B.C. or Alberta

OTTAWA, ON: A new paper released by the Canadian Taxpayers Federation (CTF) reveals that Toronto, Ottawa and Montreal are three of the least financially attractive destinations for NHL players due to high tax rates.

The CTF looked at the top 30 NHL free agents from this past off-season, comparing the amount of income tax they will pay in whichever province or state their new team resides, to the amount of income tax they would pay if they had signed with the Leafs, Senators, Canadiens or Jets.

Phoenix Coyotes goalie Mike Smith would pay an extra $2.8 million in taxes over the life of his six year, $34 million contract if he signed the same deal with the Montreal Canadiens, $2.6 million if he signed with the Leafs or Sens and $1.6 million if he signed with the Jets.

“The numbers don’t lie; NHL players take a financial hit to play in Ontario, Quebec, California, New York and New Jersey,” said former Junior A goaltender, Senators fan, paper author and CTF Research Director Nick Bergamini. “Does this give successive Leafs’ GMs an excuse for poor trades and sloppy draft choices? No. But it does mean that these teams are all at a major disadvantage because of punitive provincial income tax rates.”

The CTF paper also estimates that the Toronto Maple Leafs would have $12.6 million in cap space if their players paid Alberta income tax rates or $8.2 million with B.C’s tax levels.

“I'd support moving the Leafs part-time to Red Deer if that meant signing Cody Franson, but then I'd have an even tougher time finding tickets to go... plane tickets that is,” said CTF Ontario Director Candice Malcolm.

Meanwhile, Calgary, Edmonton and Vancouver all rank among the best places to play from an income tax standpoint.

“I was hoping this paper would let me blame the government for the Canucks 2011 loss in the finals. Alas, no, I will just keep blaming the fact that I took off my lucky sweater,” said CTF B.C. Director and long-suffering Canuck-fan Jordan Bateman.

The CTF paper also shows that Canada’s eastern teams will be at a major disadvantage in the 2014 unrestricted free agency market. Signing with the Sens, Leafs or Habs will mean millions in lost wages for upcoming UFAs like Henrik Lundqvist and Joe Thornton. Recent tax hikes on high income earners in Quebec and Ontario will only make playing in these provinces a tougher decision.

“This is good news for the Calgary Flames, as they’ll likely be tossing bags of cash at Lundquist after Jordan Eberle lights up goalie Joey MacDonald this season,” said Oilers season ticket holder and the CTF’s VP Communications Scott Hennig.

“All jokes aside, this paper also shows that highly-skilled, highly-mobile employees have huge advantages or disadvantages thrown at them based on the local income tax rate,” said Bergamini. “This goes for more than just NHL players, but for doctors, engineers, CEOs of major companies. If it’s hard to attract free-agents in the NHL because of your tax rates, it’s probably also be hard to attract other highly skilled workers. Governments need to keep that in mind when they’re passing their next budget.”

The CTF’s paper on the taxes of NHL players can be found HERE.

 

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For more information:

Nick Bergamini, CTF Research Director, paper author w: 1-800-265-0442, c: 613-796-6123

Candice Malcolm, CTF Ontario Director w: 1-800-667-7933c: 416-648-0850

Jordan Bateman, CTF BC Director w: 604-999-3319

Scott Hennig, CTF VP, Communications w: 780-589-1006 c: 780-953-4484

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