Rita Smith remarks, Ontario pre-budget consultation

Rita Smith headshot

TTA Executive Director Rita Smith 

Remarks – Pre-Budget Consultations January 19th, 2016, Peterborough

Rita Smith, Executive Director, Toronto Taxi Alliance

 

Good morning and thank you for this opportunity to speak.

As this Committee undertakes the work of ensuring Ontario has the funds it needs to deliver important programs, I want to call your attention to a new threat to our financial security – the so-called “Sharing Economy.”

Firms like Uber and AirBnB are not “sharing.” They are avoiding the taxes paid by legal, legitimate transportation and hotel industries and enjoying an enormous competitive advantage by doing so.

This is not a new “sharing economy”; it’s the old Underground Economy. It’s not new, it’s not right, and it’s not good for Ontario.

Take Uber: every transaction conducted by Uber is processed in the Netherlands. Fortune magazine published a detailed description of how Uber avoids taxes all around the globe, describing the scheme as the “Double Dutch.”

It’s too complicated to explain in 3 minutes, however, I am providing each of you with a copy of this article and the convoluted diagrams used to describe how Uber takes a $100 taxi ride in Italy and turns it into a meagre 20 cents of income claimed in the Netherlands.

Uber uses the same system to avoid taxation in Canada.

Meanwhile, Uber uses the roads, infrastructure, snow removal and other services  paid for with OUR tax dollars to make a profit, and then send that money overseas.

Uber is not helping to build Ontario; it exploits Ontario.

We wish every elected official would read this Fortune article before supporting the Underground Economy, which Statistics Canada notes generated $42 billion in 2012 and is growing at almost the same rate as the legitimate economy.

Legal taxi drivers in Ontario remitted millions of dollars in HST in 2015 – about $75 million in Toronto alone. This is in addition to the $15 million in fees the taxi industry pays the City of Toronto.

If the 20,000 cars Uber claims to have on the road were taxed at the same rate, Uber would be paying hundreds of millions of dollars in taxes and fees.

It is not.

Would customers enjoy paying less for their rides if we did not have to collect taxes? Undoubtedly: Uber’s lower rates are a huge part of its draw.

Legitimate businesses are at an extreme disadvantage competing with operations which neither pay employees nor remit taxes.

In the month ahead, you will see tax-paying businesses go under as the Underground Economy grows.

We believe that Ontario is at an important crossroads as it creates Budget 2016.

You have an opportunity to commit to a level playing field for service providers and enforcement against tax evaders, and you must.

A legitimate business enterprise which pays taxes, fees, and insurance cannot compete with an Underground competitor which pays none of these things.

The “Sharing Economy” doesn’t share anything. It’s a soft, fuzzy term which hides the true nature of this Underground Economy and the damage it is doing to Ontario’s tax paying businesses.

Thank you.

-30-