Provincial government's move follows Canadian Tire's rejection of 'botched' levy
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OTTAWA — The McGuinty government is set to scrap its recently imposed eco fees on thousands of consumer products in the wake of consumer anger and retailer irritation.
Environment Minister John Gerretsen is expected to announce today that the Liberals will eliminate the environmental fees on thousands of potentially hazardous products -- less than three weeks after retailers were required by Stewardship Ontario to start charging customers on new products from fluorescent bulbs to fire extinguishers.
The government retreat followed an earlier announcement Monday by Canadian Tire, one of Canada's largest retailers, that it would no longer impose eco fees on its customers. Denouncing the new fees as "botched" and "confusing," Canadian Tire president Mike Arnett said the company would have nothing to do with the fees until government and industry figure out a system that "makes sense for everyone."
"Stewardship Ontario did not do a good job in preparing Ontarians for these new fees," Arnett said in a bluntly worded statement.
"They did not properly communicate why the fees exist or the importance of safely recycling these hazardous products."
Within hours of the Canadian Tire announcements there were several news reports -- all citing "government sources" -- indicating the provincial government was beating a hasty retreat on the eco fee issue.
On July 1 -- the same day the Harmonized Sales Tax came into effect -- Stewardship Ontario, a government-created but industry-led and funded agency charged with overseeing and paying for the recycling of ordinary and toxic waste, imposed an updated version of its hazardous products recycling program, effectively requiring retailers and manufacturers to pay eco-fees on thousands of new products besides those already on the list. Some retailers, including Canadian Tire, attempted to pass the fees on to consumers.
Ontario consumers, surprised at the sudden imposition of the fees, weren't buying it and reacted angrily. They blamed the McGuinty government. Last week, for example, 300 people denounced the new eco fees as yet another tax imposition with a demonstration outside Premier Dalton McGuinty's constituency office in Ottawa.
Retailers weren't pleased either. Canadian Tire was forced to apologize last week to customers for wrongly charging eco fees higher than those authorized. However, Canadian Tire executives decided they weren't going to take it anymore, and on Monday the company said it would not charge the new eco fees until, in Arnett's words, "a better system can be developed with Stewardship Ontario and the Government of Ontario."
Arnett said the rollout for the new fees was "poorly handled by all involved." The provincial agency responsibly for recycling -- Waste Diversion Ontario, which oversees Stewardship Ontario -- set up a "very complicated" fee system for "materials" instead of "products," which, according to Arnett, meant that two similar bands of cleaning products could have two different eco fees depending on slight differences in their ingredients.
Even more confusing was how retailers were left to interpret the fees as they saw fit, Arnett said. That meant "five different retailers may charge five different eco-fees for the same product -- all depending on how they interpret the very complicated fee structure." In Canadian Tire's case, the new eco fees affected some 8,700 products.
Arnett also acknowledged Canadian Tire "did not do a good job of implementing the fees." That failing, however, was largely due to the "complex" nature of the fees. "Although we quickly fixed any incorrect fees, we still have customers every day asking us why two nearly identical products have different fees."
The eco-fee system was set up in 2008 to have manufacturers and retailers collect monies to fund a government recycling program for diverting hazardous and toxic materials away from garbage dumps. Stewardship Ontario collects the eco fees from businesses that make and sell these kinds of products. The companies, in turn, decide which fees they pass on to consumers.
The problem in this case -- and what particularly angered consumers and frustrated retailers -- is that there was no public notice eco fees would be imposed on thousands more products -- everything from household cleaners, paint and aerosols to fire extinguishers, fluorescent bulbs and even fish bowls.
For its part, Stewardship Ontario, implicitly acknowledged the fee rollout wasn't handled well when it announced late Monday -- also after Canadian Tire's decision -- that it would proceed with "a plan to increase the accuracy, transparency and consistency of eco fees at point of sale."
With the approval of its oversight body, Waste Diversion Ontario, Stewardship Ontario said it will require companies that make or import products to provide product-related eco-fee information allowing the agency to create a searchable data base on its website that consumers can check regarding hazardous products.
"We have heard from consumers loud and clear," said Gemma Zecchini, Stewardship Ontario's chief executive officer. "In retrospect, consumers clearly were looking for information on how eco fees work, and we will initiate efforts to help them understand that."
Not surprisingly, the eco-fee issue was politicized. "This is yet another Dalton McGuinty tax grab," said provincial Tory leader Tim Hudak. NDP leader Andrew Horwath said. "The McGuinty government dropped the ball."
Canadian Tire, meanwhile, expressed concern about banning eco fees. "We are concerned in the face of this botched roll-out of July 1st fees that the most politically-expedient and short-term solution is to 'ban fees for consumers,'" Arnett said. "That would be the wrong move."
Consumers should be able to make informed choices about what they buy, including information regarding how much it costs to recycle the product, the Canadian Tire president said. If consumers are paying recycling fees up front, as they now do on many products, they should know and understand what they are paying for. "They should never had to pay for hidden fees -- deliberate or otherwise."
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