There has been furor in Ontario over a “new” fee known as the Eco Fee (or ECOFEE as it appears on receipts), which entered its second phase on July 1st (Happy Canada Day!) – the same time as the new HST (Harmonized Sales Tax). The furor is because no-one knew about it. Eco fees have been around for a few years, but until July 1st 2010 it had been mostly buried in the price and not listed on the receipt with a few notable exceptions like oil filters, tires, etc. Further, the program was recently expanded as to the scope of products under the program.
What is the Eco Fee?
According to the organization administering it, Stewardship Ontario, it is a fee levied to “Stewards” to cover the cost of proper disposal or recycling of various materials. Stewards are essentially retailers that sell products that contain materials subject to this fee.
Is it a tax?
Stewardship Ontario says it is not a tax.
“The eco fee is not mandatory nor is it a tax…” – Stewardship Ontario, from their website.
It is mandatory. What is not mandatory is whether the retailers detail the ECOFEE on your receipt or not. The Merriam-Webster Dictionary defines a tax as: “a : a charge usually of money imposed by authority on persons or property for public purposes b : a sum levied on members of an organization to defray expenses”. Since the fees collected are used for recycling and management of the disposal of certain materials, a program that is run by Stewardship Ontario under the regulation of the Government of Ontario, this clearly qualifies as a tax.
HST is charged on top of the ECOFEE: A tax on a tax
HST is charged after the ECOFEE has been levied, whether it is detailed on your receipt or not. Therefore we have a situation of a tax on a tax.
Now, the problem is not so much that there is an eco fee. I think we realize that the proper management of disposal of hazardous materials or the recycling of said materials is important for the environment and our health. The problem was that this bomb was dropped when we weren’t looking, with poor notice. In some cases, the ECOFEE can add 10% or more to the pre-HST cost of an item. The problem is compounded by the fact that some retailers choose to itemize it, and others include it in their cost of acquiring the items – which only confuses people. Plus, there have been reports that incorrect amounts are being charged by some retailers who choose to itemize it… and so on, and so on.
Just how much more complex can a tax regime get? (Because it IS a tax!)
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