Canadian tech leaders help change NDP’s tax policy for startups

Thomas Mulcair NDP

Back in May, BetaKit wrote about a speech Thomas Mulcair gave at the Broadbent Institute, where the NDP leader proposed a new tax plan aimed at helping low-income families. Under the proposed plan, the NDP would tax all earnings on stock options, rather than the 50 percent amount under current regulations.

While intended to target CEOs and senior executives, party officials confirmed that the new tax plan would affect anyone with stock options, with direct implications for startups and their employees. Here’s what we wrote at the time:

“Part of being employed by an early-stage startup often means taking a smaller wage in favour of taking stock options. In doing so, these employees forgo immediate returns in order to gamble on getting a much bigger one down the road. This is different from a CEO or senior executive of an established corporation who is guaranteed to see significant returns upon of their stock options.”

While our article saw some traction, not much came of it as Canadians steeled themselves for one of the longest election cycles in recent memory.

What a difference a week can make.

As we were preparing to board a plane to Vancouver for Startup Week last Saturday, OMERS Ventures CEO John Ruffolo took to Twitter to sound the alarm to startups. His tweet was quickly followed by one from Shopify CEO and co-founder Tobias Lutke, who called the tax break “core to the entire startup ecosystem funding cycle.” Lutke continued, saying, “the tax incentives simply allows young companies to attract senior talent by creating a risk/reward story that appeals.”

Typical of a national daily, The Globe and Mail eventually woke up to the story, interviewing Lutke as well as Hootsuite CEO Ryan Holmes, who were both articulate in their opposition to the plan.

“It is one of our most important recruiting tools,” Holmes said. “By putting taxation on this they are going to hobble the potential of startups to incentivize and recruit employees… They will hurt small and innovative businesses.”

One day later, Holmes and Lutke had received a letter from none other than Mr. Mulcair, stating that the NDP’s proposed tax plan will “exclude options granted by early stage companies.”

A busy week, five months in the making, indicating not only that the coming election could be a defining moment for Canada’s entrepreneurship movement, but the leaders of that movement can help steer the course.

Related: The Pocket Guide to Canadian Election Issues for Entrepreneurs

Douglas Soltys

Douglas Soltys

Douglas Soltys is the Editor-in-Chief of BetaKit and founder of BetaKit Incorporated. He has worked for a few failed companies and written about many more. He spends too much time on the Internet.