NDP's Mulcair Says Won't Raise Stock Option Taxes for Startups

  • Party leader sends letter to leaders of two top tech firms
  • Tax plan drew criticism it would hinder technology startups

Canada’s New Democratic Party Leader Tom Mulcair pledged to exempt early-stage companies from his election promise to increase tax rates on stock options, after technology companies complained that the policy would stunt growth of the country’s startups.

In a letter to chief executive officers Tobias Lutke of Shopify Inc. and Ryan Holmes of Hootsuite Media Inc., Mulcair said the policy is aimed at established companies that use stock options as a form of compensation to avoid income tax.

Tom Mulcair

Photographer: Ben Nelms/Bloomberg

Bloomberg News reported that the plan to tax 100 percent of stock-option benefits, compared with the current 50 percent, had riled members of Canada’s tech community, who said cash-strapped startup companies often offer share grants as an alternate way to attract talent.

“The NDP strongly supports the innovation and technology sector,” Mulcair wrote in a Sept. 24 letter obtained by Bloomberg. “As government we’ll work with leaders in the tech and innovation sector to ensure the success of the next generation of Canadian startups.”

With about three weeks to go before the Oct. 19 federal election, Mulcair’s NDP is in a three-way tussle with Prime Minister Stephen Harper’s Conservative Party and the Liberals, led by Justin Trudeau. The race has focused on how to turn around Canada’s struggling economy.

The technology sector has been a bright spot amid collapsing oil prices and recession, with employment in the software sector soaring and big U.S. companies like Amazon.con Inc. and Google Inc. opening offices in Toronto and Vancouver.

Entrepreneurs are looking to follow the success of startups like Ottawa-based e-commerce company Shopify, which has soared 45 percent to a market value of C$3.7 billion ($2.8 billion) in Toronto since going public in May.

New Democrats have characterized the current rate on stock options as a “loophole” exploited by Canada’s wealthiest chief executives. The Conservatives and Liberals haven’t proposed any change to the tax.

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