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Ontario Court of Appeal Upholds Billboard Tax

In a 3–0 decision, judges find that the City of Toronto was within its authority to create the tax, and extend the City's scope of application.

Photo by {a href="http://www.flickr.com/photos/chromewaves/4966290790/in/photostream/"}chromewaves{/a} from the {a href="http://www.flickr.com/groups/torontoist/pool/"}Torontoist Flickr Pool{/a}.

Public space activists are claiming a big victory today: the Ontario Court of Appeal has just upheld the validity of the City’s billboard tax, created in 2009 and challenged by the outdoor advertising industry.

The background: in December 2009, after years of discussion and a concerted campaign by public space activists, the municipal government passed new measures concerning billboards in Toronto. The key elements included a harmonized billboard bylaw to coordinate sign placement, size, and material across Toronto (we had been working with a patchwork of rules left over from before amalgamation); the creation of a Sign Variance Committee (which would consider applications from anyone who wanted to install a billboard that went further than what the regulations allowed); and the implementation of a new billboard tax.

The billboard industry, unimpressed, challenged the validity of the new tax, claiming that imposing it fell outside the City’s scope of authority. The courts disagreed, finding that the City exercised its authority properly when it created the tax. But there was catch: the court also ruled that the tax could only apply to new signs; signs that already existed when the tax was created should be grandfathered in, and be tax-exempt. This, effectively, would have gutted the tax, leaving the vast majority of signs in Toronto in the clear, and the City with much-diminished revenue. And so the City in turn appealed.

Today, the Ontario Court of Appeal ruled in favour of the City: it upheld the validity of the billboard tax, agreeing with the earlier decision, and moreover found that the City is within its authority to apply the tax to all legal signs—the ones that already exist and new ones alike. The City can now start levying the tax, which staff estimate will bring in about $10.4 million a year. That money will go first to beefed-up billboard regulation (many of Toronto’s billboards are illegal, but staff don’t currently have the resources to enforce the rules), and then into general revenues. Rami Tabello has been campaigning against illegal billboards for several years and represents the Toronto Public Space Initiative on this issue: “We are delighted,” he said, highlighting the fact that the appeals court “stated unequivocally that ‘The powers conferred by the City of Toronto Act should be read in a generous fashion so as to enable the City to meet the needs of its residents and to provide them with good government.’”

The ruling also forces the appellant, Pattison Outdoor, to open its books to the public, meaning that we’ll all have a clearer sense of just how much the billboard industry has been making. If it’s more than the City’s conservative estimates, Tabello hopes, the City won’t just start collecting a billboard tax, it will raise the rate at which the tax is levied: “The release of Pattison Outdoor’s confidential leasing information will allow the public to scrutinize the industry’s argument that the tax was an undue burden and should give us more ammunition to advocate for a tax increase.”

The billboard industry, needless to say, is frustrated by today’s ruling. Rosanne Caron, president of the Out-of-Home Marketing Association of Canada, spoke to us on behalf of sign companies. “We’re extremely disappointed,” she said, adding that the industry is “going to look at our options” with regard to the possibility of further court appeals. She maintains that the billboard industry is not raking in the cash their opponents assume, and said that “the imposition of this billboard tax on pre-existing signs will create a devastating tax burden on the industry.”

With the books opened to the public soon, we hope we’ll be able to put that question to rest one way or another in short order.

The full text of today’s ruling is available online.

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