St. John’s proposes plan for student union to repay taxes

Daniel
Daniel MacEachern
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St. John’s city council has approved a payment plan to square taxes owed by Memorial University of Newfoundland Students’ Union.

St. John’s council has OK’d a plan for the student’s union at Memorial University to repay back taxes to the city.— Submitted photo

The student union fought a battle more than $380,000 in taxes — arguing it should be exempt from the property tax charged on its Breezeway Bar — all the way to the Supreme Court of Newfoundland and Labrador in July, and lost, and lost a subsequent appeal in November.

Following the legal battle, Travis Perry, the union’s director of finance, appealed to the city and asked for a payment plan to address the decade’s worth of taxes, which — when this month’s bill for 2014 is factored in — total $388,412.66.

On Tuesday, Bob Bishop, the city’s deputy city manager of financial management, proposed a plan to the city’s standing committee on finance and administration.

The plan offers:

    ‰ A 50 per cent abatement of interest

    ‰ Interest-free status on the past-due amount until it is paid

    ‰ Ten years to pay

“They’ve accepted they owe what they owe, but they’re also looking for a tax exemption going forward,” said Bishop at Tuesday’s committee meeting.

An exemption is not on the table, said Bishop, adding it would set a precedent for the nature of the operation. Committee members were in favour of the payment plan in theory, even though not all councillors thought every detail was appropriate.

Coun. Art Puddister supported the plan, but said he thinks 10 years is too generous a time frame.

“I’m sort of a believer in, if you live in the real world, you gotta play by the rules,” he said.

Coun. Tom Hann wondered if the union would have had less difficulty paying its tax bill if it hadn’t fought the bill to the province’s highest court.

“That has to be a tremendous cost, to take an issue like that to the Supreme Court,” he said.

But Deputy Mayor Ron Ellsworth disagreed.

“More power to ’em. They felt they were being done wrong and they went and fought for their rights and went through a process. More power to ’em,” he said, adding that now that the process is through, it’s time to work with the union to come up with a solution that works for both sides.

Asked if such plans were common, Bishop said interest abatement and payment plans for individuals and service clubs owing back taxes are common, but the city doesn’t do it for businesses, not even one that’s losing money. In his letter to the city requesting tax-exempt status, Perry said the Breezeway had a deficit of $123,000 last year.

“Any other bar would have closed long ago if they were losing that kind of money,” said Bishop.

Coun. Danny Breen, the committee chairman, said the union’s tax problems started after the Breezeway Bar — which had been jointly run by the union and the university, thereby enjoying tax-exempt status — was taken over by the student union.

“When the student union took it over, this is one of the byproducts that came out of it,” he said.

“It became a student union entity as opposed to a joint university-student union entity, therefore it’s not considered tax-exempt because it doesn’t have an educational aspect to it.”

Breen said the bar is a special case and  deserves some leniency.

“But going forward, they have to be paying their municipal taxes, same as other bars, to the city,” he said.

The city will present the plan to the union. Messages left for Perry requesting comment Wednesday were not returned.

 

dmaceachern@thetelegram.com

Twitter: @TelegramDaniel

Organizations: Supreme Court

Geographic location: Newfoundland and Labrador

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  • Jack Terryn
    January 16, 2014 - 11:14

    It's interesting that the student union continually argues for free tuition and expensive social programs but screams and cries when it's asked to contribute to society like everyone else. Taxes exist to pay for things like low tuition and social programs. This student union needs to learn this. And I find it mind-boggling that their bar is loosing money. The only explanation is inept management by the union. How else does a bar surrounded by tens of thousands of drinking and partying students lose money? And lose so much money.