The Out-of-Home Marketing Association of Canada is making good on its December idea of taking legal action against the City of Toronto to quash the Third Party Sign Tax Bylaw imposed on the outdoor advertising industry, which has now taken effect: It’s off to the Ontario Superior Court of Justice, with a hearing expected in the near future.
The City of Toronto is requesting $10.4 million in tax from the companies involved.
“We were told, when the City of Toronto passed the bylaw, that if the sign companies could provide independently audited statements showing their revenues, that the City would revisit the law before it took effect,” says Rosanne Caron, OMAC president. “We tried to cooperate. Our members: Astral Media Outdoor, Pattison Outdoor, Titan Worldwide, CBS Outdoor Canada and Outdoor Broadcast Network, plus Clear Channel Outdoor (non-member), went to great expense to each have independently audited revenue figures specifically for their signs in the Toronto area. These figures were then sent to Ernst & Young, the City of Toronto’s own accounting firm, which aggregated them.
“The result was a total of about $62 million in revenue – about one-third of the City’s claimed figure of somewhere between $150 million and $180 million. The City had been basing its figures on the companies’ rate cards and, as anyone in the business knows, it’s a business of negotiation and you can’t even go by, say, 70% of the rate card price. Further, the boards are often not filled.”
The true revenue figures for the six companies’ signs in Toronto area (Ed. Believed to total about 3,000 signs), as aggregated by Ernst & Young, were then presented by OMAC’s lawyer to the Deputy City Manager.
“The result was that, after its promise, the City refused to reconsider the tax situation at all, so we have filed legal documents taking the City to court,” says Caron. “Since the City refuses to accept what it asked for and to revisit the bylaw, we have no other option but to take legal action,”
In an earlier interview, Caron said that the city originally was considering a tax of $1.6 million that OMAC had been willing to accept as a level of taxation to cover the enforcement and administration of the sign bylaw. However, the City later was said to be seeking the $10.4 million ‘for art and beautification of the City’.
OMAC is also looking at the by-law restricting the erection of signs, also passed by the City, but is still reviewing its options and grounds for challenging that, as well.
(Ed. We believe that Pattison has also filed its own notice requesting a hearing at which it plans to try and nullify the controversial tax bylaw.)