Federal budget closes loophole on hospital parking

Costs could increase as non-profit institutions lose HST exemption

Already facing steep parking charges when they visit loved ones in hospital, some Canadians may find themselves paying even more as a result of the federal budget.

The budget ends a tax exemption on parking charges that had been available to public institutions if their parking was operated by a non-profit partner. Now, they’ll have to add federal tax to fees regardless of who runs the parking lot — and some may pass the increase on to consumers.

Officials at some hospitals, mindful that parking is already expensive, told Postmedia News they’ll absorb the tax hike — but that will mean less revenue available to the cashstrapped health institutions.

“Visiting a sick family member in the hospital … shouldn’t cost Canadians more,” said NDP national revenue critic Murray Rankin. He tried unsuccessfully this week to have a motion passed condemning the federal measure, which he said showed “poor judgment and a lack of sensitivity.”

The federal government says it is merely closing a tax loophole.

Before the budget, if a hospital charged for parking, GST or HST was applied. However, if the parking service was operated through a nonprofit foundation associated with the hospital, the tax did not have to be charged. Budget 2013 ends that practice.

It wasn’t clear how many hospitals had been using the loophole, but some major ones say they are affected.

Ann Fuller, a spokeswoman for the Children’s Hospital of Eastern Ontario, said parking services are operated through the non-profit CHEO Foundation, meaning the hospital will now be required to charge federal tax.

Fuller said the hospital has yet to decide how the change will affect its parking rates. Daily maximum fees for parking are $13 at CHEO.

Paul Clarry, vice-president of facilities and paramedical services at Newmarket-based Southlake Regional Health Centre, said his hospital had originally charged HST when it operated its own parking service.

The hospital then transferred the parking operation to the Southlake Foundation, an associated non-profit, which ran it without charging taxes.

The Southlake Foundation must now charge tax on parking fees. It hasn’t raised its fees for hospital visitors, however; it has simply lost the revenue that will now be paid in taxes.

Many Canadians already consider hospital parking lot rates to be pricey. For their part, hospitals have argued they desperately need the revenue they get from parking.

“In Ontario, public funding covers 74 per cent of hospital operations, so hospitals rely heavily on other revenue sources, such as cafeterias or parking to make up the other 26 per cent,” said Pat Campbell, president and CEO of the Ontario Hospital Association.

“These self-generated revenue sources support activities such as the purchase of capital equipment and clinical research.”

In its consolidated financial statement, for instance, The Ottawa Hospital reported over $16.5 million in revenue from parking in the fiscal year ended March 31, 2012. It already charges tax to parking lot visitors, meaning the government makes just under $2.2 million per year on that hospital’s parking alone.

Hospital parking rates vary widely across the country. Daily maximums range as high as $23 in Toronto, to as low as $2 at various hospitals in Nova Scotia.