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A court has ruled that Toronto can start levying a billboard tax expected to generate an estimated $10.4-million a year for arts initiatives in the city.

Fernando Morales/The Globe and Mail

The Supreme Court of Canada has decided not to hear the advertising industry's appeal of the City of Toronto's controversial billboard tax.

The court announced the decision Thursday  and, as is customary, provided no reasons.

The decision leaves a April ruling from Ontario's Court of Appeal in place that dismissed arguments from Pattison Outdoor Advertising LP and  the Out of Home Marketing Association of Canada that the city had no authority to impose its billboard tax.

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The policy, which applies to "third-party" billboards, or those that do not advertise the business where they are located, and was brought in 2009. But because of the legal challenges, none of the estimated $10.4-million a year the tax is meant to bring in has been collected.

Accompanying the tax were also tougher rules meant to crack down on the proliferation of this kind of advertising, which has been targeted by a determined group of activists for the better part of a decade.

The tax would collect a levy of $1,100 to $24,000 a sign, depending on the size on type of billboard.

The Ontario Court of Appeal had also struck down a previous win for the industry, which had convinced a lower court judge to grandfather signs put before April 2010 -- a move that would have exempted the vast majority of billboards in the city.

Lawyers for Pattison and the outdoor advertising industry argued that the tax was discriminatory because it exempts companies with city contracts, such its rival Astral, which runs the advertising in transit shelters and other "street furniture." The also argued the levy was an "indirect tax," since it would be passed onto their customers, and was beyond the city's powers to implement.

Pattison Outdoor has 885 sign structures in Toronto, including several large billboards along the Gardiner Expressway, and will be on the hook for more than $3.7-million.

Rosanne Caron, president of the Out of Home Marketing Association of Canada, said in an e-mail that the industry group is "disappointed that it was not provided the opportunity to have the Supreme Court of Canada determine the limits of the taxation powers of the City of Toronto to tax signs."

She added that the tax "affects our freedom of expression."

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City Councillor Shelley Carroll, an advocate of the tax who was budget chief under then-mayor David Miller when it was passed in 2009, praised Thursday's decision.

She said the new revenue from the tax would allow the city ramp up enforcement against illegal billboards. But most of the revenue, she said, is supposed to go toward arts funding, although that decision has not yet been finalized by council.

Ms. Carroll said the city had never seen an industry mobilize in this way to fight a policy: "It may be the thing that shot them in the foot, because part of their case was 'We don't make enough money.' But they certainly retained every lobbyist in town and every lawyer in town to try and fight this thing."

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