Toronto to Collect Billboard Rent

Frank deJong

[ GroundSwell, March-April 2010]

The City of Toronto plan to levy billboard space is a creative way to help finance city services without negatively impacting the city's economy.

The fees, which will range from $850 to $24,000 a year depending on the size and type of billboard, will return to the city the unearned income that accrues to billboards (and other desirable finite assets), known to economists as "economic rent".

Economic rent is the windfall profit -- above a healthy business profit -- that results from monopoly control of assets like billboards, locations (especially land near water, parks, transit stops, hospitals, schools), parking spaces, taxi licenses, oil, the EM spectrum, some generic internet domain names...

By this astute action, Toronto City Council will return $10.4 million a year of the publicly-generated wealth that flows to billboards, back to its citizens to whom it rightfully belongs, instead of allowing it to be pocketed by billboard owners.

Repeating this example, cities and towns everywhere could untax businesses and buildings, reduce transit and recreation fees, and instead finance transit, culture, recreation, police and fire by collecting the unearned economic rent that accrues to land, public infrastructure, billboards, taxi medallions, attractive locations, access to roads, parking.

Unlike job-killing taxes on productive businesses and user fees on quality of life activities, economic rent is an ideal source of city revenue. Since rent is unearned income, those asked to pay it cannot pass it on to other citizens. Additionally, rent recovery is a politically attractive, free market mechanism that improves land use and housing stock, creates jobs, and provides an incentive to new business start-ups.

Australia has been collecting billboard rent for many years, with some prominent locations producing $100,000 pa per year.

17 million people yearly pass the billboards at Dundas and Yonge.

Alternatively, many feel billboards should be banned as in Vermont, Alaska, Hawaii, Maine.