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Toronto Star : Part 1 - King Cohl of rock’n’roll and the tax that never was

samedi 16 décembre 1995

Source : Toronto Star

From The Toronto Star :

King Cohl of rock’n’roll and the tax that never wasBy Kevin Donovan Toronto Star

"No one ever warned the boy rock ’n’ roll was a vicious game."- April Wine

The world’s top concert promoter has pulled off a phony, multi-million dollar tax scheme at the expense of bigname rock ’n’ roll bands and the Ontario public.

The scheme, orchestrated by Toronto-based Concert Productions International (CPI), has been carried out at the Grandstand concerts held during the Canadian National Exhibition since 1984.

Bruce Springsteen, U2, the Rolling Stones, Neil Young, Rod Stewart and Tina Turner - you name it, the big-name concerts have been hit.

In a nutshell, here is the story :

CPI has been telling these bands that the ticket prices for their shows include either a 10 per cent provincial sales tax or a $2 to $3.50 "CNE gate charge." So it is quite natural that these "taxes" - as much as $200,000 in some of the big concerts - come off the band’s pay cheque.

Just one problem. All concerts at the CNE fair are exempt from the 10 per cent sales tax, an exemption thatextends to "agricultural fairs" in Ontario.

And the "CNE gate charge," which happens to be roughly equal to the 10 per cent tax ? Never authorized, never has been.

Exactly, says Metro auditor Allan Andrews : "To cut to the chase, there is no tax and no gate charge. If they have portrayed them as real charges, as they appear to have done, there is a problem."

These two key facts have been confirmed by the provincial revenue ministry, the CNE, and the MetropolitanToronto auditor, who oversees the CNE.

If you add up all the taxes and gate charges CPI has told the bands it has had to collect since 1984 you get a staggering $5 million on a gross ticket sale of $54 million.

But Michael Cohl, the scruffy, jeans-wearing multi-millionaire who runs CPI, has vigorously denied anywrongdoing during two separate interviews lasting more than five hours in total.

On the one hand, Cohl says : "A hundred per cent of the box office goes to the CNE. It includes the 10 per cent tax, allowance, benefit, exemption or whatever you want to call it. I don’t want to get caught up in words."

But he says the money from the "tax," the gate charges, and much more was handed over to the CNE, achronically impoverished, municipal government organization.

Auditor Andrews says that simply is not true.

"If (CPI) took the 10 per cent and gave it to the CNE that would have been great," he said. "They didn’t. There’sno tax. Period."

So who are the victims of this scheme ?

* The bands : Their pay cheques are minus the non-existent tax and/or gate charge, with amounts ranginganywhere from a few thousand dollars to $20,000 to as high as $200,000 per band.

* Fans : According to Cohl, the box office revenues from ticket sales includes the 10 per cent tax. This tax is phony. This may mean that each one of the 2 million concert-goers who attended the shows could be out as much as$3 (based on a $30 ticket).

* The Province of Ontario : Since the tax appears to have been levied in spite of the exemption, it is possible $5million worth of tax on $54 million worth of ticket sales could be owed to the province.

What about the CNE ? The tax exemption was negotiated by a CNE official working with CPI. However, while the CNE gate charge and tax were collected in the CNE’s name, the Metro auditor says the CNE does not appearto have received any "quantifiable" benefit.

From New York to Los Angeles to London, representatives of bands have expressed astonishment at what CPIhas done.

Concerts affected featured such popular artists as Sinead O’Connor, Whitney Houston, George Thorogood, Elton John, David Bowie, Aerosmith and the Beach Boys.

"This is outrageous," said Barbara Skydell, whose New York agency, Premier Talent, represented Springsteen,U2, Van Halen and Judas Priest in contracts struck with CPI.

"We just assumed the tax and the gate charge were legitimate taxes to governments in Canada."

Still, Cohl is adamant.

"There’s nobody being f----d here," Cohl said.

"My answer to you is at the end of the day you will find that all of those monies did flow to the CNE and nobodyhas been defrauded."

"The first cut is the deepest."- Rod Stewart

On Wilshire Blvd. in Los Angeles and Madison Ave. in New York, U.S. talent agents who book bands around the world know the CNE Grandstand as a big venue where a lot of money can be made.

The Grandstand, just off Lake Shore Blvd. in Toronto, can hold 25,000 fans in one configuration. Move the stage to one end and you can pack in 70,000 people.

A lot of tickets. A lot of music bucks.

Enter Michael Cohl and CPI.

In the early ’80s, Cohl, an intelligent - some say brilliant - former Ottawa strip club owner, was in the process of building his fledgling company into a world leader.

Today, Cohl, 47, and business partner Bill Ballard have sold their share in CPI to John Labatt Ltd., and moved on to a new company Cohl has dubbed The Next Adventure Inc.

It is a global entertainment company that will take big bands on tour, just like Cohl did with the Rolling Stones’Voodoo Lounge and Steel Wheels tours. He is trying to sign just such a deal with Irish rockers U2, a deal that Cohl says is worth $300 million.

Ozzie Kilkenny, U2’s business manager in Ireland, is one of many in the industry who believes Cohl is the king of rock ’n’ roll. "Michael Cohl is the best at what he does," he said.

Back in 1983, the big deal on Cohl’s plate was the CNE. He wanted to become its exclusive promoter of concerts.

The CNE carried with it a very special attribute, one that had a lot more to do with pigs and cows than rock ’n’ roll. It was tax exempt.

That’s because subsection 7(2) of Ontario’s Retail Sales Tax Act states that concerts held during an agricultural fair, like the CNE, are exempt from collecting and remitting the province’s 10 per cent "entertainment tax."

Ron Martin is the senior manager of the tax advisory unit of the province’s retail tax branch. He says the exemption was originally intended for small country fairs that did not want the administrative headache of charging a tax on tickets of say $5 or $6.

But the exemption has developed into a tax loophole that has allowed it to be applied to rock ’n’ roll concerts with tickets in the $30 range or higher.


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