Foreign publishers get a free ride in Ontario blue box levy

A few years back the Ontario government started taxing magazines over a certain size to offset 50% of their contribution to the costs of the Blue Box recycling program. The Waste Diversion Act (2002) levied a per-kilogram charge on magazines, catalogues, phone books and other printed matter.

Stewardship Ontario, as the government euphemistically dubbed the program, required publishers resident in Ontario and who produced more than 15 tonnes of magazines or had sales of more than $2 million annually to register as "obligated stewards" and file an annual report. Originally the levy and the reporting was a relatively small nuisance and publishers grudgingly went along with it. Many of them may have felt that it was their civic duty.

However, the tax has increased year by year over the program's first four years and it will be 2.193 cents a kilogram for 2008, which is more than 2,600% higher than it was in 2003 (0.081 cents/kilo). So a mid-sized, relatively frequent magazine that produces, say 20,000 kilograms of magazines and inserts next year will be paying a fee of almost $44,000. (In the first few years, Stewardship Ontario charged only a portion of what was nominally owed, but publishers are starting to pay more attention now because, starting next year, they will be paying the full fee.)

The government has said the fee increases are justified and necessary because the volume going into the blue boxes has dramatically increased, magazines are costing more to get rid of and bringing in less revenue and so on.

Yet, even while the province is putting the squeeze on Ontario-based publishers, it has no plan (and no indication that it will anytime soon) to similarly levy foreign publishers who are contributing the majority of magazine volume to the blue boxes.

Despite having four years to do so, Stewardship Ontario still has not found a way to impose and enforce the tax on "first importers" -- levying the tax through the Ontario-based distributors and wholesalers. The program is entirely voluntary for companies not resident in Ontario and -- natch -- the U.S. publishers, and their distributors and wholesalers have simply ignored it.

As a result, U.S.-based magazines and Canadian wholesalers are receiving a free ride and Ontario publishers are paying for it.

Magazines Canada (representing the consumer magazine industry -- trade magazines are exempt) has made strong representations about this to Queen's Park and it was recently brought up by MC President Mark Jamison with the new (acting) Deputy Minister of Culture.