Case could go to the Supreme Court
In a significant blow to the out-of-home advertising industry, the City of Toronto has won an appeal granting it permission to begin levying a billboard tax on out-of-home vendors that could end up costing them as much as $11 million a year.
Monday’s ruling by the Ontario Court of Appeal is the latest development in a three-year saga that began when the City introduced the contentious billboard tax in 2009. The tax was part of a new harmonized sign bylaw governing the out-of-home advertising industry in Toronto.
The tax ranges from $1,100 to $24,000 per year per advertising face, depending on size and type. A standard 10-foot by 20-foot board is taxed at the lower rate, while digital boards – such as those erected alongside the Gardiner Expressway – are subject to the maximum rate.
Out-of-home vendors such as Pattison Outdoor Canada had already argued, unsuccessfully, that the billboard tax was discriminatory because it didn’t apply to companies that have a relationship with the city, most notably Astral Media Outdoor. Montreal-based Astral is currently in the midst of a multi-year contract with the city to supply street furniture including bus shelters, information columns and garbage bins for many of which it sells advertising space.
However, lawyers for Pattison and the Out-of-home Marketing Association of Canada (OMAC) also launched a successful legal challenge resulting in a 2011 ruling by the Ontario Superior Court that the tax would not apply to signs lawfully erected prior to April 2010.
Industry Impact
According to OMAC president Rosanne Caron, that ruling meant that the billboard tax would only have impacted the 50-60 boards erected in the city since April 2010.
However, the latest decision by the Ontario Court of Appeals means that out-of home companies must now pay tax on all of the estimated 4,400 advertising faces throughout the city.
According to a report in The Globe and Mail, Pattison alone controls 885 faces in the city and will be forced to pay taxes totaling $3.8 million.
“The net for us is that ultimately it undermines the economic viability of the out-of-home industry in Canada,” said Caron, whose organization represents out-of-home companies that together control more than 90% of the $484 million spent on out-of-home advertising in Canada. “And you can’t ignore the adverse impact it’s going to have on the local economy as well.”
Caron said the implementation of the tax will negatively impact the community, including the $28 million in rent paid to private property owners by the out-of-home industry and the approximately $6 million in space donated to charities and other non-profit groups. “All of those things are going to be impacted based on the industry’s ability to do these things,” she said.
The ruling could also hinder both technological and advancement for the out-of-home companies, Caron suggested.
The out-of-home companies have 60 days to appeal the ruling, and Caron said the chances are “very good” that the industry will consider taking its case to the Supreme Court. “We haven’t made a final decision – we’re reviewing the options,” said Caron. “[But] because it has such a crippling effect on our industry, you have to explore all options and consider what you can do.”
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