So much for the lack of a government subsidy being a deal breaker.
Public money wasn’t needed after all for Danny Williams to convince the Manitoba Moose to amble down the Trans-Canada Highway to Newfoundland.
Before we debate whether the new American Hockey League team in St. John’s should be called the Moose, the Swilers, the Caps or the Dannys, let’s send to the penalty box the invalid and illogical arguments that were presented in favour of handing over taxpayers’ money to a pro hockey team.
Most are minor penalties, although some warrant a misconduct.
Williams’ histrionic exaggerations last week earn him a five-minute major for high-shticking.
• “The team will create $10 million in spinoffs.” That word, “spinoffs,” gets tossed around more than a puck at practice. It does not mean $10 million — or whatever amount someone declares the “spinoffs” will be — will come back to government coffers, as many people think. The word is slang for the “multiplier effect,” a concept in economics that says Activity A will lead to Activity B which will bring about Activity C, and so on, all of which involve spending money.
The multiplier effect — or spinoffs — means spent money will circulate through various people and companies. A spinoff is not a tax or revenue that accrues entirely to the government. You go to a game, pay for parking, buy a beer, get your kid a Moose/Swilers jersey — that’s the multiplier effect in action.
Only a portion of that money makes its way to the public purse.
• “The payroll tax will enable
the government to earn back its $500,000 subsidy.” No, it won’t.
Suppose the Moose/Swilers have a payroll of $10 million. The provincial payroll tax is two per cent. That’s $20,000 payroll tax per
$1 million of payroll.
Some of my fellow hockey fans apparently live in a universe where $200,000 is equal to $500,000.
• “The tax on ticket sales will give the government back its $500,000 subsidy.” No, it won’t.
The Moose/Swilers will, hopefully, create some magic on the ice, but they won’t magically inject cash into people’s pockets and provide them with more disposable income. That’s another economics term, describing the amount of money a person can spend on wants rather than needs — after taxes, rent/mortgage, food and such are paid for.
A hockey team will provide people with one more option for entertainment spending. Go to a hockey game or go to a movie? Hockey game or bowling? Wherever entertainment dollars are spent, the sales tax total going to the government will be the same. Disposable income, not a hockey team, determines whether the government’s sales tax take goes up.
• “A $500,000 subsidy is less than $1 per resident of the province.” It sounds convincing, but is irrelevant. By this logic, Worthy Cause B should receive $2 per resident, and Worthy Cause C should get $3. Oh, look — Acme Inc. has an economic proposal just as good as Danny’s that needs only $1 from each resident. Before you know it, you’ve hit $100 or $500 or more.
• “If we don’t provide an annual subsidy, we won’t get an AHL team.” That is, like, so last week.
Pro minor hockey
Here’s the best reason not to provide public money to a pro hockey team: imagine it is 2031, and you’re at the local rink to watch your grandson — or granddaughter — play hockey.
Like most St. John’s arenas, the facility is decrepit. The ice is bumpy and rutted. The boards are worn and splintered. Rusty droplets fall from the rafters onto the discoloured ice.
Another hockey parent comments, “You know, instead of giving Danny Williams’ hockey team
$10 million over the past 20 years, we should have built a twinplex.”
Brian Jones is a desk editor at The Telegram. He can be reached by email at bjones@thetelegram.com
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Talk about not knowing your tax facts, the players will be paying income tax from their province of residence which more then likely won't be in NL but their home province. Like the NL's working out west and living here they pay NL tax not the province that they are working in income tax.