HomeMy WebLinkAboutDTS-10-026 - Retail Sales Tax Exemption for BicyclesJ
KITC~~R
De~elopment&
Technical5ervrces
REPORT T0: Development and Technical Services Committee
DATE OF MEETING: February 8, 2010
SUBMITTED BY: Cycling Advisory Committee
PREPARED BY: Ronald K. Schirm
WARD(S) INVOLVED: ALL
DATE OF REPORT: January 12, 2010
REPORT NO.: DTS 10-026
SUBJECT: RETAIL SALES TAX EXEMPTION FOR BICYCLES AND A
PROVINCIAL CYCLING AGENCY
RECOMMENDATIONS:
That a letter, drafted by the Cycling Advisory Committee, be sent by the Mayor and
Council to Dwight Duncan, Minister of Finance, Province of Ontario, requesting the
following:
That the Retail Sales Tax exemption on bicycle sales under $1000 continue when the
Harmonized Sales Tax is introduced and remain beyond its expiration date of December
31, 2010; and further,
That dedicated, on-going provincial funding be directed to municipal cycling
infrastructure projects; and further,
That Corporate tax concessions be considered for private sector companies that
undertake cycling related capital investments, and further,
That the Province be requested to establish a provincial cycling agency.
BACKGROUND:
The Province of Ontario made changes to its Retail Sales Tax starting on December 1, 2007,
and as a result bicycles under $1000 and related safety equipment were exempted from the
Provincial Sales Tax (PST). This program was extended to December 31, 2010 due to its
success in encouraging an active lifestyle, promoting cleaner, healthier means of transportation,
and easing vehicle congestion on Ontario roads. At this point the impact of the recently
approved harmonization of the Retail Sales Tax in Ontario and the Federal Goods and Services
tax into the Harmonized Sales Tax (HST) on this program are unclear.
The Cycling Advisory Committee is in receipt of a letter from the Bicycle Trade Association of
Canada urging Ontario municipalities, retailers and cycling advocacy groups to contact the
Minister of Finance for the Province of Ontario with regards to the HST and provincial funding
for cycling. The Committee, at its meeting on December 8, decided that this is an opportune
time to let the Minister of Finance know how important the sales tax exemption, and moreover,
3-1
dedicated funding from the provincial level to the municipalities is in promoting cycling in the
province.
Quebec has benefited greatly from Velo Quebec, a cycling advocacy organization that has
partnered with the Quebec Ministry of Transportation in developing the "La Route Verte," a
4,300 km network of on and off road cycling infrastructure that links the province from end to
end. This project in and of itself has mobilized local municipalities throughout the province of
Quebec, dramatically increased modal share of cycling in urban centers and created a
substantial cycle tourism industry in the province. As an example more than 600,000 cycle
tourists visited Quebec for multi-day stays in 2005. Infrastructure built in Montreal as a result of
this partnership is heavily used daily for both utilitarian and recreational uses. Some cycle paths
in Montreal average more than 5,000 bicycles daily per week day, indicating heavy commuter
use. The highly successful Bixi, bike rental program has been so successful in Montreal that it is
studied internationally for its effectiveness in providing short term bike rental. The "La Route
Verte" was recently named the best bike route on the planet by National Geographic. In short,
the partnership between Velo Quebec and the Ministry of Transportation has transformed the
Province and its cities into cycle friendly communities.
REPORT:
Cycling in the Province of Ontario has largely been driven by local municipalities and individual
organizations which has led to the development of cycling infrastructure and programming at an
uneven pace and inconsistent manner. The Province established an excellent first step in
showing leadership with the retail sales tax exemption for new bicycle purchases under $1000
that was instituted in December 2007 and originally scheduled to cease in November 2008. The
program was so successful that it was extended until December 31 2010. The original year long
program was estimating a savings of $25 million to consumers purchasing new bicycles and
related safety equipment.
It is unclear at this point how the recently adopted harmonized sales tax will affect this program.
At this time it is not included in the list of exemptions as provided by the Province. By not
extending this program and offering an HST exemption to at least December 31, 2010 the
momentum that has been building throughout its lifecycle would be negatively affected.
The Cycling Advisory Committee feels that it is imperative that the exemption is maintained.
However, if the retail sales tax exemption cannot be maintained, then retail sales tax revenue
accrued by the Province from the sale of bicycles should be used directly for the building of
cycling infrastructure at the local level on an ongoing basis.
Further to this, The Cycling Advisory Committee feels that the Province needs to display
leadership in the promotion of cycling as a viable transportation vehicle and tool for an active
lifestyle by:
1. Allocation of provincial tax revenues directly to municipal cycling infrastructure projects
(i.e. on and off road cycling infrastructure, end of trip facilities, etc.); and
2. Corporate tax concessions for private sector companies that undertake cycling related
capital investments (i.e. the installation of bicycle lockers, showers and other cycling
amenities and end of trip facilities in Ontario businesses) and/or offer employee cycling
related allowances (i.e. bicycles, bicycle safety equipment, cycling specific clothing etc.)
3-2
In order for municipalities to gain maximum benefit from provincial investments in cycling
requires that those investments are made in a systematic and reasoned way. As an example,
specific allocations of provincial monies to municipal cycling infrastructure should be in the
context of creating holistic municipal transportation plans that incorporate cycling specifically
where the best results can be achieved in reducing transportation related greenhouse gases
(GHG) and smog.
Accordingly there is a need for a provincial cycling agency analogous to that of Quebec's Velo
Quebec. Comprised of amulti-stakeholder board, such a provincially sanctioned organization
would work with provincial ministries, municipalities, the Association of Municipalities of Ontario
and community cycling organizations to undertake and implement municipal and regional
bicycle plans. This agency would make specific recommendations for cycling infrastructure
investments to the Ontario Government that further the province's goals of GHG and smog
reduction, health promotion and increase in transportation modal split and reduction of urban
traffic congestion. Working with municipal partners, with funding available from both the
provincial and local level, this agency would undertake a plan to interconnect and expand an
Ontario wide system of bicycle infrastructure analogous to the aforementioned Quebec's Route
Verte. The Agency would also provide the following services:
- Compile statistics and technical research and assist the province in developing
comprehensive multi modal transportation plans (i.e. seamless links between cycling and public
transit);
- Build consensus amongst local advocacy groups and coordinate cycling specific public
consultations;
Provide technical training on bikeway design and development;
- Create and support key provincial cycling showcases and promotional events such as
races and bicycle expositions; and
- Work with existing organizations such as the Friends of the Greenbelt Foundation to
grow a vibrant cycle tourism industry in Ontario.
A modest legislative effort and financial expenditure to establish such an organization would not
only benefit municipalities such as the City of Kitchener, put provide a long term benefit to
Ontario's environment and economy.
FINANCIAL IMPLICATIONS:
None to the City of Kitchener.
COMMUNICATIONS:
The Accompanying letter is to be sent, on behalf of the Cycling Advisory Committee, by Mayor
and Council to Dwight Duncan, Minister of Finance, Kathleen Wynne, Minister of Transportation,
Dalton McGuinty, Premier, local Ministers of Provincial and the Federal Parliament, as well as
all members of the Association of Municipalities of Ontario.
3-3
CONCLUSION:
The City and the Region of Waterloo have on many occasions taken the lead both provincially
and nationally in matters that are important to the health and well being of its citizens. It is in
this light that it is recommended that the accompanying letter, drafted by the Cycling Advisory
Committee, is to be sent by the Mayor and Council on behalf of the Cycling Advisory Committee
to Dwight Duncan, Minister of Finance, Kathleen Wynne, Minister of Transportation, Dalton
McGuinty, Premier, local Ministers of Provincial and the Federal Parliament, as well as all
members of the Association of Municipalities of Ontario, outlining the content of this report and
its recommendations. The Committee feels that re-enforcement from many voices will sway the
Province to build on those first steps by adopting the recommendations and enabling
communities like the City and the Province as a whole to ultimately become cycle friendly.
ACKNOWLEDGED BY: Jeff Willmer, General Manager, DTS.
3-4
DTS Report ~ 0-026
Attachment 1
Body of proposed letter to the Minister of Finance
Re: Impact of the Harmonized Sales Tax on the Provincial Sales Tax exemption
of bicycles program and future fiscal policies to promote cycling in the Province
Dear Minister Duncan,
The Mayor and Council of the City of Kitchener, on behalf of its Cycling Advisory Committee
request:
1. That the Retail Sales Tax exemption on bicycle sales under $1000 continue when the
Harmonized Sales Tax is introduced and remain beyond its expiration date of December
31, 2010.
2. That dedicated, on-going provincial funding be directed to municipal cycling
infrastructure projects.
3. That Corporate tax concessions be considered for private sector companies that
undertake cycling related capital investments.
4. That the Province be requested to establish a provincial cycling agency
The City of Kitchener recognizes the value on many fronts of the use of bicycles for utilitarian
and leisure transportation. As an example of the city's commitment to cycling a Cycling Advisory
Committee was established in 2009, its members being private citizens with City staff support.
Further to this, staff are at this time working on a cycling master plan. Our Official Plan, Growth
Management Strategy and "Plan for a Healthy Kitchener" all identify cycling as an integral
element in transportation and activity.
In order for the City to accelerate the building of essential infrastructure and provide the
necessary programming in order to make Kitchener a "bike-friendly" city, support and assistance
from other levels of government are necessary. As you know the Ontario Government
introduced a Retail Sales Tax Exemption for Bicycles and Related Safety Equipment ("PST
exemption on bicycles") in November of 2007. This program was scheduled to expire on
November 30th 2008 but was subsequently extended in the 2008 provincial budget to expire on
December 31, 2010. The policy rationale for the exemption was, "... to encourage Ontarians to
stay healthy and be active in their daily lives."
It is unclear at this point how the recently adopted harmonized sales tax will affect this program.
At this time it is not included in the list of exemptions as provided by the Province. By not
extending this program and offering an HST exemption to at least December 31, 2010 the
momentum that has been building throughout its lifecycle would be negatively affected.
The City of Kitchener Cycling Advisory Committee feels that it is imperative that the exemption
is maintained. However, if the retail sales tax exemption cannot be maintained, then retail sales
tax revenue accrued by the Province from the sale of bicycles should be used directly for the
building of cycling infrastructure at the local level on an ongoing basis.
3-5
Further to this, The City of Kitchener Cycling Advisory Committee feels that the Province needs
to display leadership in the promotion of cycling as a viable transportation vehicle and tool for an
active lifestyle by:
1. Allocation of provincial tax revenues directly to municipal cycling infrastructure projects
(i.e. on and off road cycling infrastructure, end of trip facilities, etc.); and
2. Corporate tax concessions for private sector companies that undertake cycling related
capital investments (i.e. the installation of bicycle lockers, showers and other cycling
amenities and end of trip facilities in Ontario businesses) and/or offer employee cycling
related allowances (i.e. bicycles, bicycle safety equipment, cycling specific clothing etc.)
In order for municipalities to gain maximum benefit from provincial investments in cycling
requires that those investments are made in a systematic and reasoned way. As an example,
specific allocations of provincial monies to municipal cycling infrastructure should be in the
context of creating holistic municipal transportation plans that incorporate cycling specifically
where the best results can be achieved in reducing transportation related greenhouse gases
(GHG) and smog.
Accordingly there is a need for a provincial cycling agency analogous to that of Quebec's Velo
Quebec. Comprised of amulti-stakeholder board, such a provincially sanctioned organization
would work with provincial ministries, municipalities, the Association of Municipalities of Ontario
and community cycling organizations to undertake and implement municipal and regional
bicycle plans. This agency would make specific recommendations for cycling infrastructure
investments to the Ontario Government that further the province's goals of GHG and smog
reduction, health promotion and increase in transportation modal split and reduction of urban
traffic congestion. Working with municipal partners, with funding available from both the
provincial and local level, this agency would undertake a plan to interconnect and expand an
Ontario wide system of bicycle infrastructure analogous to the Quebec's Route Verte. The
Agency would also provide the following services:
Compile statistics and technical research and assist the province in developing
comprehensive multi modal transportation plans (i.e. seamless links between cycling
and public transit);
• Build consensus amongst local advocacy groups and coordinate cycling specific public
consultations;
• Provide technical training on bikeway design and development;
Create and support key provincial cycling showcases and promotional events such as
races and bicycle expositions; and
Work with existing organizations such as the Friends of the Greenbelt Foundation to
grow a vibrant cycle tourism industry in Ontario.
A modest legislative effort and financial expenditure to establish such an organization would not
only benefit municipalities such as the City of Kitchener, put provide a long term benefit to
Ontario's environment and economy. It is time for the Province to build on the leadership it has
shown with the sales tax exemption.
3-6