The ECOFEE Is A Tax

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!)

Preet Banerjee
Preet Banerjee
...is an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
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Showing 25 comments
  • Michael James

    I agree with you that eco fees are taxes. The fact that retailers choose to pass this tax along as a separate line item on a bill is an annoyance. Perhaps we can make everything free and when we get to the checkout, we can get hit with a retailer cost fee, profit fee, CEO bonus fee, etc.

  • stu lach

    The Ecofee has been listed on all the CTC receits I’ve got for at least the last 2 years. It’s on receits for oil, oil filters and of course tires. Batteries would be another item.

    • Preet

      Quite right Stu – I’ve amended the post to reflect that. Cheers!

      • Larry

        Yes, the ECOFee has appeared on Canadian Tire and other retailers receipts for a number of months.

        Ontario is simply realizing that there is a cost to dealing with and properly handling toxic wastes. Your initial post strikes many of us as a thoughtless tale of saving a few dollars when much more is at stake. Whether the recovery fees are hidden or displayed on receipts is not the issue when it comes to saving our planet and a future for our children and others.

        It is incumbent on us to cover the costs of safely dealing with toxic substances. We’re behind other jurisdictions such as countries in Europe and a number of states south that are miles ahead of us in cleaner energy and handling the toxicity we create.

      • Preet

        @Larry – I think you may have misinterpreted something.

        “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.”

        I think I made it clear that taking responsibility for the proper handling of waste is necessary. The issue I’ve chosen to point out is the improper discussion surrounding the issue between government and the public.

      • anne

        Agree that hazardous waste should be disposed of appropriately (and that the purchase of these products should be discouraged), BUT I have trouble understanding why a $4 charge for a can of driveway sealer when it all ends up on my driveway?? Why not a plan that refunds you for the used potion i.e only charges for the portion actually put into the disposal system. Charging for the whole can is just a tax grab.

      • Preet

        The program is sloppy on many different fronts unfortunately. A lot of details in the program make me scratch my head…

  • schultzter

    Sounds like you’re living in Quebec – our province charges the provincial sales tax on top of the GST!

    • Preet

      Really? What is the rationale behind that?

      • schultzter

        You want a rationale for something Quebec does?! Most likely they’re just trying to provide themselves with justifications for declaring independance from Canada!!!

  • Canadian Capitalist

    Well this is the same Government that charges a tax and calls it a Health Insurance Premium. This is just par for the course :)

    • Larry

      I guess you would prefer the private health care system down south where those that have the dollars receive care and the majority of working families do not. Our society is enriched by folks who care and do not grumble about taxes and hence providing public services including health care for themselves and the larger community.

      • Larry

        A follow up “Canadian Capitalist” and this thread: Thanks for fielding a response to your post about the Health Insurance Premium we pay in Ontario. I may be wrong in feeling that you see the cost of health care as a burden. I’ve checked out your blog and appreciate your sharing of views on the investment front. One can enjoy the world of finance while also thinking of others not as fortunate as most of us are in our fair land. Have a great day.

  • Connie

    The thing that I am wondering is what is this tax for. Right now the municipalities are in charge of waste disposal. So the money I am paying should be going to the municipalities, I haven’t heard anything to this effect. I feel sorry for the guys at the municipalities trying to balance their budget as the provincial government add taxes and then give the work (and none of the money) to the lowly municipality.

    So if the money is not going to actual waste disposal, where is it going. To the debt. That is one way to get the deficit down.

  • Michael James

    Larry seems quite skilled at misinterpreting comments. I’m not against taxes. Of course we need to make consumers bear the cost of environmental clean-up. Just put the taxes together in one charge. Having all these extra charges at checkout is annoying. And it actually works against the objective. If the advertised price of an item included all charges, people might make different choices. So-called visible taxes are actually hidden at the time you make your purchasing choice.

  • larry macdonald

    Ontario Conservatives promise to repeal
    http://www.torontosun.com/news/canada/2010/07/13/14697816.html

  • Multiple Egg Baskets

    Don’t worry the NDP promised to clean the slate and eliminate the HST so why not the eco fee! The public may have agreed with the fee to some extent if it actually made aware, but the majority of people in my inner circle, small that it may be, were not even aware of the new fee until reading it in the Sun.

  • ross

    Its a tax, none of the money goes to recycling anything. I buy the product, pay the eco fee. Take the product home. It is now at home with me, how is this eco fee helping me recycle it or dispose of it? The fee also does not goto the government so it is not helping them in the cost of their recycling programs, it goes to the stewrdship company. All the money goes to run their company.

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