Proposed billboard tax will have devastating impact on Toronto outdoor advertising industry
Economic study shows new tax will be unfair burden on small businesses, advertisers and employees
TORONTO – May 21, 2009: The Out-of-Home Marketing Association of Canada (OMAC) today released the results of an independent economic analysis of the City of Toronto’s proposed billboard tax, which shows the new tax will have a devastating impact on the outdoor advertising industry. The proposed tax of $16 million is a late addition to the City’s development of a new harmonized sign by-law. The suggested tax will amount to a 25% charge on all advertising income earned from billboards.
“It appears that the new billboard tax put forward by the City sign by-law project team will be imposed in Toronto without proper consultation with the industry and without a basic awareness of the industry’s financial fundamentals,” said Rosanne Caron, President of OMAC. “This tax threatens the survival of the outdoor advertising industry in the City which puts at risk significant revenue earned by the City of Toronto and many small businesses who receive income from our members.”
The study was conducted by Altus Group Economic Consulting to examine the Toronto out-of-home advertising industry and analyze the economic consequences of the proposed billboard tax brought forward on March 5, 2009 by the Buildings Department of the City of Toronto at the Planning and Growth Committee. The study indicates the following facts about the industry in 2008:
• OMAC members earned $64.8 million in combined net revenue before operating costs
• OMAC members will contribute $36.8 million in average annual revenue to the City through current agreements
• OMAC members contributed $28.4 million in annual revenue to private property owners
• OMAC members contributed $6 million in free space to over 95 charities and non-profits
• OMAC members contributed $2.2 million in free space to promote City programs
• OMAC members annual earnings before interest and taxes were $8 million
The Altus study questioned why the sign by-law project team ignored guidance from the Hemson Report commissioned by the City in 2007 which proposed a maximum tax of $2.7 million per year on billboards to fund by-law enforcement. The new proposed tax of $16 million is a dramatic increase for which no explanation or rationale has been provided. The study also found the new tax to be a threat to local charities that depend on outdoor marketing companies for free public service advertising. Further, competitive media such as street furniture and the TTC will be tax exempt creating another disadvantage for billboard advertisers.
“The tax rates being proposed by the City Staff are discriminatory, generally confiscatory and lack any sense of reality,” said Dr. Frank Clayton, author of the study and a tax expert with more than 40 years consulting experience.
The outdoor advertising industry provides direct and indirect employment to thousands of Toronto residents who would be impacted by a reduced or even prohibited industry. The addition of a billboard tax to considerations of a new harmonized sign by-law creates one more uncertainty for OMAC members who were already concerned about the lack of clarity around numerous new regulations which could impact outdoor advertising within the City.
OMAC members represent 90% of the outdoor advertising revenue generated in the City of Toronto which includes industry leaders such as Astral Media Outdoor, CBS Outdoor, the Outdoor Broadcast Network, Pattison Outdoor and Titan Outdoor.
“We support the development of a new harmonized sign by-law,” said Ms. Caron. “The industry needs clear governance from the City to replace the current patchwork of inconsistent rules and enforcement. We want to be a part of the solution but so far we have been frustrated in our attempts to participate in the process despite repeated efforts to provide relevant and accurate information. Our fear is that regulations and a new tax will be imposed on us without a full understanding of our industry and the negative repercussions for the Toronto economy.”
To read the economic analysis conducted by Altus Group Economic Consulting, visit:
To read OMAC’s position on the City of Toronto’s proposed harmonized sign by-law and billboard tax, visit:
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OMAC (www.omaccanada.ca) is responsible for promoting the benefits and effectiveness of out-of-home media to advertisers and advertising agencies. OMAC seeks to develop and implement new initiatives that serve as a resource
to the industry and increase understanding of out-of-home media.
Altus Group is the leading multidisciplinary provider of independent real estate consulting and professional advisory services worldwide. With a staff of over 1,200, Altus Group has a national network of 34 offices in 24 cities throughout Canada, 8 offices throughout the UK and 1 office in the U.S. We operate as: Altus Research, Valuation and Advisory; Altus Cost Consulting; Altus Realty Tax Consulting, Altus Geomatics; Altus InSite; Altus Edwin Hill; Altus Andrews; Altus Geocom; and, Altus Capital Planning. Altus' clients include banks, financial institutions, governments, pension funds, asset and fund managers, developers and landlords and companies engaged in the oil and gas industry.
For more information, please contact:
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