Ontario Diverts $30 Million in Tire Recycling Surplus Back to Industry
More than $30 million paid by Ontario consumers in fees to ensure used tires are recycled — money caught up for years in a tax dispute with the Canada Revenue Agency — will be split by tire companies this year.
The money being paid out is on top of an additional $12 million in surplus recycling fees paid by consumers that was distributed to tire producers in 2020 after Ontario Tire Stewardship (OTS), which managed tire recycling in the province, was phased out and replaced with a new producer-led system.
Critics say any surplus money from OTS should go to consumers, and not to tire producers, which are companies that import or sell tires, or products with tires, and who are now responsible for ensuring tires are recycled.
Peter Hargreave, an environmental consultant, said it was “ludicrous” to take surplus funds from OTS, “entirely raised from Ontario consumers through direct non-negotiable tire fees and distribute them to multinational tire producers,” instead of using them to benefit Ontarians.
“Providing these funds directly to tires producers provides no direct benefit to consumers,” said Hargreave, “and does nothing to improve Ontario’s tire recycling system.”
Consumers in Ontario continue to pay recycling fees of around $6, an amount which is taxed, on top of every tire they purchase despite the province lowering the recycling target for tires.
As of 2025, tire producers have to manage 65 per cent of the tires they sell in Ontario, through recycling, reuse or retreading, down from an 85 per cent collection and management target.
The lowered target has disrupted Ontario’s once robust tire recycling industry, leading to unsafe stockpiles of tires at garages and retailers and has slowed down the processing of used tires into crumb, granules that can be used in other products.
The current windfall for tire producers comes after a dispute with the Canada Revenue Agency (CRA) over whether OTS was allowed to charge producers HST on top of the fees that producers paid the stewardship organization to manage tire recycling. Those fees are recouped by producers when consumers buy new tires.
The CRA also took the position that OTS should have paid income tax on monetary subsidies that the stewardship organization gave to haulers, for example, to incentivize them to pick up tires from locations that were far away from recyclers, such as in Northern Ontario.
The Resource Productivity and Recovery Authority (RPRA), which enforces Ontario’s recycling legislation, says the dispute has been resolved in OTS’s favour.
“The remaining $30M in surplus funds will be disbursed once all outstanding legal and financial matters are resolved,” said Wilson Lee, RPRA’s chief of programs and public affairs. “We are hopeful this final step, along with the final liquidation of OTS, will occur by the end of the year.”
The recovery authority has been overseeing the process.
Producers will be the benefactors unless the current Ontario environment minister, Todd McCarthy, overturns a direction by former environment minister Jeff Yurek when the first $12 million in OTS surplus fees was paid out.
In April of 2020, Yurek wrote to Grant Thornton, the court-appointed liquidator overseeing the phase out of OTS, directing the $12 million in surplus fees be paid to tire producers, with the expectation that the money would be used to offset eco fees on tires to benefit consumers.
The ministry of the environment didn’t respond to a question by press time about whether there was any evidence that the payout had benefitted Ontarians.
Yurek’s letter overturned a direction by his predecessor, Rod Phillips, to use the money to offset future consumer eco-fees.
Phillips wrote to the administrator of OTS in 2019, when Grant Thornton had yet to take over as liquidator, “that the interests of tire consumers should be considered when developing options to deal with program surpluses, since consumers were charged fees when they purchased new tires.
”The amount of money to be returned to consumers should align with the amounts that OTS previously charged for the collection and management of used tires while the program was operating, for example, approximately $4.00 per passenger tire,” wrote Phillips.
That direction was overturned by Yurek a year later.
“One can only hope the Minister (Todd McCarthy) revisits his predecessor’s decision,” said Hargreave.
This article was first reported by The Star
