Thursday, March 25, 2010

Vancouver Bike Shops: Mountain Equipment Co-Op Taxes Unfair?




Global TV's Chris Gailus reported this story on tonight's six o'clock news:
…Members can [now] find at Mountain Equipment Co-Op: their own line of bicycles.

But not everyone is excited about the new additions. Smaller bike retailers say thanks to tax laws, they're competing on an uneven playing field.

Elaine Yong reports:

Tim McDermott knows a lot about bikes, and as the design expert at Mountain Equipment Co-Op, it's been exciting to be in charge of the retailer's inaugural line of bikes:

"By the time the spring hits, two things will happen. One, we'll sell more bikes. The other thing which happens is, as spring comes, the weather gets nicer, you start to sell a little bit more of that entry-level bike."

The bikes are only available at MEC's Vancouver store for now. Already they've sold more than 400.

Tim Southam, Mountain Equipment Co-Op:

"MEC has been selling cycling gear - clothing, parts, accessories, both MEC brand as well as from other brands - for over 25 years. So I think the question on a lot of people's mind is why has it taken so long for MEC to be selling bikes."

But there is another question that has independent bike retailers spinning their wheels. While the co-op continues to expand it's business in competing directly with smaller stores, it also enjoys tax benefits others don't.

Tim Woodburn, West Point Cycles:

"It's not specifically about bikes and I think this sentiment has been echoed by outdoor retailers in the past, but the question is what co-operative tax law is. And does the MEC, which is a large national retailer, do they qualify under the spirit of that co-operative tax law?"

As the oldest bike shop in the city, West Point Cycles says it welcomes competition, but it has formed it's own co-op of sorts - a group of independent retailers who are lobbying Ottawa to revisit the tax laws and ensure there's a level playing field.

Mountain Equipment Co-op won't comment on the fairness of tax laws, saying it's operating it's business to the letter of the law.

There are two things everyone can agree on though, regardless of where you shop: buy before the HST adds seven percent to the sticker price, and more bikes on the road are better business for everyone.

Tom Southam, Mountain Equipment Co-op:

"Our overriding goal in this is really to do just that - to encourage Canadians to cycle, to grow the sport and ultimately I think other bike retailers will benefit from our being in the market."

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