After a 16-month review of the Ontario Municipal Act, the province on Nov. 16 denied municipalities the authority to charge vehicle registration fees as a way to generate additional revenue. The Trillium Automotive Dealers Association (TADA) has called the decision “a major victory”.
TADA represents about 1,000 new-car dealers in Ontario and lobbied against such a fee. In a letter sent to Minister of Municipal Affairs Bill Mauro in October, TADA wrote that “a vehicle registration tax would send the wrong signal to the auto sector.”
The controversy dates back to August when Premier Kathleen Wynne came under fire after an Association of Municipalities of Ontario annual general meeting in Windsor, Ont., where she said the province was considering giving municipalities the authority to prescribe more “revenue tools.”
Ontario’s cities and towns rely on a combination of property tax revenues, federal and provincial transfers and user fees to fund expenditures. Their authority to charge additional tax and registration fees is limited. After the August meeting, however, politicians and members of the auto industry spoke out against vehicle fees, which TADA called nothing more than a tax over and above existing provincial fees, such as a vehicle permit ($20), plates ($45), yearly plate stickers ($60 in northern Ontario and $120 in southern Ontario) and biannual emissions tests ($30).
A vehicle registration fee at the municipal level had the potential to generate millions in revenue for Ontario cities and towns. Despite this, seven municipalities passed resolutions to ban such fees. Representing one of the seven, Leeds-Grenville PC MPP Steve Clark said in a statement that, “Motorists already send about $10 billion every year to this government in licensing fees and taxes. The last thing they can afford is to dig deeper.”
TADA echoed the sentiment.
“In order to promote the auto sector, governments should encourage vehicle ownership and not simply tax a household necessity like the family car,” said Director of Government Relations Frank Notte late Monday in a news release.
Under the City of Toronto Act, Toronto remains the only municipality in Ontario with the authority to charge a vehicle registration fee, which it did for three years before being eliminated Jan. 1, 2011. The $60 fee generated about $50 million a year.
The province consulted municipalities and stakeholders throughout its municipal review and the proposed changes now head to the provincial legislature for a vote. A date hasn’t been set.
The province is obligated to consider the advice of municipalities during the consultation.
The biggest change regarding revenue generation surrounds broadening municipal investment powers, “which may lead to better investment returns through more diverse investment portfolios,” the province said in a statement.
Under the new legislation introduced Nov. 16, the government is not considering expanding municipal taxation authority to municipalities at this time.