Federal Tax Act opens possible avenue to fight Uber and city hall
by Mike Beggs
Due to the definition of a taxi business as contained in the Federal Excise Tax Act, Toronto owner/operator Gerry Manley claims there’s “no doubt” that Toronto’s Vehicle-For-Hire Bylaw (2016) lies in conflict with that federal legislation. And, he believes this could be “the straw that breaks the backs” of those municipalities that have “illegally and irresponsibly allowed PTC’s into our marketplace”.
Effective July 1, 2017, Private Transportation Companies (PTC’s) were included in the definition of a taxi business in the Excise Tax Act, thereby requiring them to register for the GST/HST and charge tax on their fares in the same manner as taxi drivers and operators are required to do.
A letter Manley received from the Department of Finance Canada on May 14 further explained that, “Budget 2017 amended the definition of a taxi business under the Act, to level the playing field and ensure that ridesharing companies are subject to the same GST/HST rules as taxis.” (He had placed a fact-finding call to the Department of Finance Canada on May 4).
To Manley’s eye, this statement, “clearly shows they view PTC’s and the taxi industry as being one and the same, and they are applying their laws to reflect that.”
That’s a far cry from the situation under Toronto’s VFH bylaw, which grants PTC’s all kinds of concessions -- most significantly unlimited access to the market. Manley alleges PTC’s and cabs have been legislated as different entities under the bylaw, “therefore removing the level playing field that the federal legislation has established.”
“There can be no doubt that the Toronto Municipal Code, Chapter 546, Licensing Vehicles-For-Hire is in conflict with the federal Excise Tax Act,” he writes in a letter to the Toronto Ombudsman (cc’ed to Integrity Ontario). “This makes Chapter 546 illegal, Ultra Vires, redundant, and without effect. And this must be addressed post haste, before any more damage is done to Toronto’s taxi industry.”
Manley suggests the integrity of MLS staff is already “in serious question”, with a Review of the bylaw now almost two years overdue.
“And now with the bylaw being illegal, our members have every right to demand the Review now, and for staff and the Licensing and Standards Committee to address the Chapter’s illegalities,” he adds.
“Since this is now creating a conflict between the two laws, it is mandated that when that occurs, the senior statute takes precedence and the junior law, which in this case is the Toronto bylaw, becomes ultra vires, redundant and without effect.”
For the City to right the illegalities surrounding the VFH bylaw, he argues all sections relating to PTC’s and their drivers must be removed, and assimilated into the sections that cover taxis and taxi brokerages, so that the bylaw applies to all equally, and so the level playing field established by the Excise Tax Act is now reflected in Bylaw 546.
“Staff must be ordered to address this, as the City is now operating a bylaw that breaches federal legislation, and to wait for staff or your committee to get around to addressing this perhaps in a year of two is totally unacceptable to our membership,” he writes, in a letter to Councillor Cesar Palacio, chair of the Licensing & Standards Committee. “And unlike with the Review of the bylaw, which is almost two years overdue, we will not wait for that time period to elapse on this issue.”
However, the long-time industry activist is well aware that cities “break the law all the time.”
“If you think the municipality will respond to this and correct the injustice, think again,” he acknowledges. “If the industry membership does not force the issue, which may have to be in court, nothing will change.”
Owner Steve Hozack totally stands by Manley’s arguments about the bylaw being ultra vires.
“But we have one big problem. John Tory likes Uber, and that (change) is not going to be done because it has to go through Council,” he alleges. “Unfortunately, it’s the Mayor and nobody wants to upset the Mayor.”
“If no one is charging and convicting, what good is the law,” he adds. “You take how Uber worked in this city for three years without a license.”
While crediting Manley for all of his “excellent” work, owner Andy Reti questions, “How exactly” the City is going to be forced to make these amendments to the bylaw.
“We’ve tried every which way to tell them (it’s not a level playing field), but they don’t listen to us,” he scoffs. “Now is the federal government going to come down here and make them change the bylaw?
“At this stage the question is, has anybody brought this to the City’s attention in a formal manner?”
Asked if the City politicians might take it upon themselves to right this wrong, he says, “Come on. They don’t know. They don’t care. All of the above.”
Mississauga plate-holder Peter Pellier suggests there’s no way Uber wants to pay GST/HST on fares by its affiliated drivers, “because it would strengthen the argument they are employees.” And he alleges, “It would appear Uber’s influence extends to the Department of Finance.”
“That said, if the CRA believes Uber drivers are circumventing the tax system, bet the farm they will go after them, particularly given the amounts involved.”
Manley says he was told by the Toronto Ombudsman the taxi industry cannot demand a response from City politicians on this or any issue because they are elected officials, but that they are entitled to a response from Licensing staff as they are City employees.
“This is a serious situation that must be rectified immediately. Staff must be ordered to address this, as the City is now operating a bylaw that breaches federal legislation,” he adds.