On April 27, 2017, the Honourable Charles Sousa, Minister of Finance, presented the 2017 Ontario budget, entitled “A Stronger, Healthier Ontario”. The Minister noted that this year’s budget is balanced and was designed to make life easier and more affordable for Ontarians. To achieve these goals, the province has focused on youth pharmacare, childcare, relief from the high cost of electricity, housing affordability, and public transit for seniors, as well as additional support for caregivers.
The budget contained a few interesting commodity tax initiatives, which are discussed below.
Tobacco Tax
To further discourage smoking and support the province’s “Smoke-Free Ontario Strategy”, the tobacco tax rate increase based on inflation that was announced in last year’s budget has been replaced with an increase in tax rates by $10 per carton of 200 cigarettes over the next three years. To initiate this change, tobacco tax rates will increase by 1 cent to 16.475 cents per cigarette or gram of tobacco (except cigars), effective April 28, 2017. In each of 2018 and 2019, tobacco tax rates will be increased by a further 2 cents per cigarette or gram of tobacco. Tobacco product wholesalers that do not collect tobacco tax will be required to complete an inventory of tobacco products on hand as of midnight on April 27, 2017, and remit the increased tax amount on any inventory held.
Proposed Municipal Hotel Tax
Amendments to the City of Toronto Act, 2006 and the Municipal Act, 2001 have been proposed to provide certain municipalities with the authority to levy a tax on transient accommodation (i.e., introduce a “hotel tax”). Where a municipality adopts a hotel tax under the proposals, and also has an existing Destination Marketing Fee (DMF) program, the revenue generated by the hotel tax would be shared with the respective not-for-profit tourism organization in an amount equal to the revenue generated under the DMF program. Where a DMF program does not exist, at least 50 percent of the hotel tax revenue would be shared with an appropriate regional or not-for-profit tourism organization.
Biodiesel in the Coloured Fuel Market
In support of the province’s initiatives to address climate change, reduce greenhouse gas (GHG) emissions and transition to a low-carbon economy, amendments to the Fuel Tax Act have been proposed to enable more companies to offer coloured biodiesel products. These changes include adding a new category of registered dyers which will be allowed to dye biodiesel that has not been blended, mixed or combined with any other type or grade of fuel. These dyers will also be exempt from the fuel transportation requirements that are currently in place for all registered dyers.
More Information
Additional information on the 2017 Ontario budget is available on the province’s website at:
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to call the Ryan TaxDirectTM line at 1.800.667.1600.