Supreme Court denies billboard tax appeal

November 23, 2012  |  Chris Powell  |  Comments

OMAC’s legal options run out in fight with Toronto city hall

Bringing an apparent end to years of legal wrangling, the Supreme Court of Canada said Thursday it will not hear an appeal by the out-of-home advertising industry to repeal the controversial billboard tax enacted by the City of Toronto in 2009.

The City instituted the controversial billboard tax as part of its harmonized sign bylaw in late 2009, touching off a three-year legal battle. It is expected that the billboard tax will cost out-of-home companies an estimated $10.4 million per year.

The out-of-home industry, led by the Toronto-based Out-of-home Marketing Association of Canada, was seeking to have its case heard by the Supreme Court of Canada after an April ruling by the Ontario Court of Appeal that gave the City the go-ahead to begin levying the controversial tax.

That ruling reversed an earlier decision by the Ontario Superior Court granting an exemption to all billboards lawfully erected in the city prior to April 2010, when the existing sign bylaw took effect.

That decision was a major – albeit short-lived – win for the out-of-home companies, since it meant they would have only been forced to pay tax on between 50 and 60 boards. The out-of-home industry currently operates an estimated 4,400 advertising faces throughout the city.

With the Supreme Court declining to hear the appeal, all legal avenues appear to have now been closed to the out-of-home industry.

“OMAC and its members are disappointed that it was not provided the opportunity to have the Supreme Court of Canada determine the limits of taxation powers of the City of Toronto to tax signs which affects our freedom of expression,” said OMAC president Rosanne Caron in an email statement to Marketing.

The billboard tax ranges from $1,000 to $24,000 per year per advertising face, depending on its size and type. Larger boards, such as those erected alongside Toronto’s Gardiner Expressway, are taxed at the maximum rate.

The out-of-home industry has long contended that the City made incorrect assumptions about industry revenues to determine the taxation level, basing its decision solely on rate cards while assuming a 70% rate and that billboards are always sold out.

Lawyers for Pattison Outdoor and OMAC had also previously argued, unsuccessfully, that the tax was discriminatory because it didn’t apply to companies with city contracts.

Astral Media Outdoor is in the middle of a long-term deal that sees it supply the city with street furniture such as transit shelters, information kiosks and garbage bins – some of which feature advertising.

Arts activist group BeautifulCity.ca said in a release Thursday that the decision marks the end of the appeals process and gives the City “clear financial means to serve the repeated commitments it has made to increase arts funding.”

Beautiful City noted that Toronto council has made three “unfulfilled” commitments to enhancing the cityscape, noting that current investment by Toronto ranks lowest “by a wide margin” among comparable cities and has actually decreased by 5% in the past two years because of inflation.

“The settlement of the tax issue will allow resources to flow into bolstering regulation of the billboard industry,” said BeautifulCity.ca. “This was agreed as an essential use of the funds by all major parties during the city’s consultation process, including by the billboard industry.”

City of Toronto spokesperson Wynna A. Brown said the city is “very pleased with this decision dealing with third party sign taxes,” in an email to Marketing.” It’s a significant victory and will result in substantial revenues for the City.”

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