Awaiting the verdict on business in Canada
Could government end your business on a whim?
“Looking back, I really wish he had bought a Tim Horton’s franchise instead of a Taxi plate.”
This comment by one of Toronto’s “Taxi Widows” a decade ago still rings in my ears. We were sitting in a Committee Room at Toronto City Hall, as a long list of deputants pleaded with Councillors not to eliminate City’s long-established system of allowing Taxi plates to accumulate value on a legal secondary market.
The “Taxi Widows” were a group of women whose husbands had driven their Taxi plates for decades until their deaths, when they were legally allowed to will the plate to their wives. A plate leased out to a working driver generated about $1600 monthly for these widows, who counted on the income to supplement their old age pension.
Toronto encouraged this system. It took a $5000 “transfer fee” every time a plate changed hands. It used the idea that the value in the plate could be used as retirement income in its sales pitch during Taxi driver training.
Over the decades, the value of a Taxi plate had tracked along pretty consistently with the price of a house: in the 1980s, a plate sold for about $100,000. In the 90s, it rose to about $200,000 and around 2010, just before Councillors arbitrarily decided to end the program that allowed for the purchase, sale and leasing of plates, new immigrants to Canada were taking bank loans of $300,000 to $350,000 to purchase a plate and get started in their own Taxi business.
So, it was painful to think that all of those Taxi owners over all of those decades would have been financially better off simply to buy a house and do nothing but let it appreciate in value. $100,000 invested in real estate in 1985 would have been a safer bet than $100,000 sunk into a Taxi plate.
Or, as Taxi widow Bernice pointed out, $100,000 invested in a Tim Horton’s franchise. Or in gold. Or Canada Savings Bonds. Basically, any investment would have been safer than hundreds of thousands poured into a Taxi plate subject to whims of the City Councillors who invented them.
Toronto did its best to get rid of the plate system, but an Ontario judge told them they could not. So, Toronto did the next best thing: it held the door open for Uber when it arrived. Toronto allowed Uber to operate outside the law for two years, until it had time to write a special law just for Uber. This, finally, decimated all value left in Taxi plates, which plummeted in value to $5000, or less.
Now, a new mayor and new Councillors are realizing that what happened was wrong, and are musing about a review of Toronto’s Taxi system. The question is, who will invest in the Taxi business now? Who would invest every working day of their entire LIFE into an enterprise which could be ripped away with no notice and no compensation?
Manufacturers of plastic bags and plastic drinking straws similarly had a century of investment, technology, and product improvement cast aside when the Trudeau government made their products illegal, based on a whim.
Imagine the frustration of the Alberta oil producers and pipeline manufacturers, hobbled by nonsensical federal regulations for almost a decade now.
This is why the outcome of the Ottawa Taxi trial, which will hear final arguments beginning November 28th, is so important for the morale of small business owners, entrepreneurs and immigrants to Canada. Watching this case, they will get a sense whether their hard work and investment will be protected or assaulted.
After Uber’s arrival in Ottawa, its Taxi industry launched the $215 million class-action lawsuit, alleging the city did not protect drivers and the industry when ride-sharing services hit city streets. The suit also claims the city discriminated against minority taxi plate holders by failing to enforce its own bylaw and changing the bylaw to allow private transportation companies.
Essentially, this trial has been pushed forward through the will of one Canadian businessman, plaintiff Marc Andre Way of Metro Taxi.
Way first brought forward the case in 2016. It was certified in 2018; delayed several times; and eventually began on January 3rd, 2023. With final arguments being heard this week, probably the very best plaintiffs can hope for is a decision by Justice Marc Smith in early 2024.
That’s eight years, start to finish, and that’s actually quite a positive outcome as compared to Toronto, where complainants were not able to get their lawsuit certified at all.
Asked to comment on the final stages of this trial earlier this month, Way said, “We are committed to taking this matter to the end, and we have the resources to do so.”
In 2024, would-be Taxi operators, entrepreneurs and immigrants will get a clear, binary answer to the question, “Should you trust the Canadian system of business with your time, energy and money? Or not?”
It won’t be just Taxi drivers waiting at this fork in the road; it will be everyone with a business to lose through government regulation.
