One of Ontario’s fiscal watchdogs says the province is overcharging for certain fees such as those for marriage and birth registrations, a situation that could leave it vulnerable to a legal challenge.
In a report released Tuesday, the Financial Accountability Office says revenue from those fees as well as personal property security fees and incorporation fees “continues to significantly exceed program costs.”
The report says personal property security fees, which relate to registering liens, are projected to bring in nearly 13 times the cost of the program in 2018-19, while incorporation fees are projected to bring in three times the program costs.
Revenue from birth, marriage and death registration fees is projected to be 1.2 times the cost of the program.
The office says the province is legally limited to levy fees that have a “reasonable connection” to the cost of offering the service.
Otherwise, it warns, a court could find the fee is in fact a tax and declare it unlawful.
“Given the legal requirement that service fee rates have a reasonable connection to the cost of the service provided, it is possible that these service fees may be vulnerable to a legal challenge,” the FAO says.
This concern has also previously been raised by Ontario’s auditor, it says.
Meanwhile, the province could afford to raise vehicle and driver registration fees, which are projected to recover 82 per cent of the program’s cost in 2018-19, down from 86 per cent the previous year, the FAO says.
This fee category is expected to see a slower growth rate – 1.8 per cent in 2018-19 compared with 10.1 annually for the six previous years – due in part to the government’s decision to cancel a planned fee rate increase, the FAO says.
Overall, Ontario expects to generate $3 billion in revenue from service fees in 2018-19, up from $2.9 billion the previous year, the report says.
The office says based on the information it received from the provincial government, there were changes to 116 service fees in 2018-19, including 87 rate increases, 26 fee eliminations and three new fees.
While most rate increases aligned with changes to the consumer price index, some rose at rates “significantly above” inflation, it says. For example, the Ministry of the Attorney General bumped up the fee for special occasion liquor permits by between 40 per cent and 100 per cent, it says.
Meanwhile, the Ministry of Natural Resources and Forestry eliminated three service fees in relation to fishing and hunting licences.