Small bike shops fear MEC effect

Just in time for spring, Mountain Equipment Co-op is rolling out its new line of bikes, but that's raising concerns with some smaller retailers who say the co-op's unfair tax advantage could drive them out of business.

The member-owned outdoor gear retailer has been selling bicycle gear and accessories for years, but until recently it left selling bikes to other retailers.

All that changed in November when the Canada-wide operation unveiled its new line of mountain, street and road racing models.

'They're contributing less to the tax pool, whether it be health care, or bike paths or education.' — Tim Woodburn, Westpoint Cycles

MEC's Tim McDermott says they've already sold about 400 or 500 bikes in Vancouver alone.

"Within Mountain Equipment Co-op there's a tremendous bike culture and that sort of led to the need for our own bicycle line," said McDermott.

This week the spring catalogues began landing on doorsteps across Canada featuring the new bikes, which are only being sold at some co-op locations.

Unfair tax advantage?

But some operators of smaller bike shops say they fear MEC's new product line will push them out of business, much like cut-rate pricing by Walmart, Home Depot, Chapters and other big-box retail chains has done to other smaller businesses.

Tim Woodburn with Westpoint Cycles said he is particularly concerned by federal tax rules that allow co-ops like MEC to pay little corporate tax compared to their competitors.

"They're contributing less to the tax pool, whether it be health care, or bike paths or education, than small community businesses do. Our issue is less that they should be allowed to sell something, than that they should be allowed to have a competitive advantage in the marketplace," he said.

Woodburn argues when MEC was formed nearly four decades ago by some Vancouver mountain climbers, its purpose was to supply its members with technical climbing gear they could not buy anywhere else. But since then, it has become a high-volume retailer of outdoor gear, and he questions whether it still deserves the same tax breaks.

"Is their position in the market the same? Is it the same today as a very, very large national chain? Is it the same as when they were first formed 30 years ago as a small co-operative?" said Woodburn.

Independent bike stores presented a petition to the House of Commons last year hoping to get the co-op tax structure changed.

In response, McDermott said MEC pays all the taxes it's required to, and also funds several community and green initiatives.