You Can Pay Taxes in Bitcoin in This Small Canadian Town

The town of Innisfil, a rural Canadian hub of 36,000 people with a lively antiquing scene, is the first municipality in the country to accept Bitcoin as payment for taxes from residents.

Starting April 15, residents can use cryptocurrency to pay their property taxes, but that’s not all. The town plans to expand the project to include all kinds of municipal services—from parking tickets, to swimming lessons, to getting a dog tag licence.

Innisfil is one of the first places in North America to allow residents to pay property taxes in Bitcoin. Joel Greenberg, a tax collector in Seminole, Florida, began accepting Bitcoin and Bitcoin Cash from everyday people to pay for municipal services, which he remits to the county in US dollars. The state of Ohio allows businesses to pay certain taxes using cryptocurrency, but not residents.

Because Innisfil is a small town and Bitcoin is still somewhat niche, the uptake isn’t expected to be huge, at least not at first. But that’s not the point.

“It allows us to develop our competency and our understanding around cryptocurrency and the blockchain and digitizing our services and our offerings to the public,” Innsifil Chief Administrative Officer Jason Reynar, who is overseeing the project’s implementation, told Motherboard over the phone. “We’re trying to create that smart citizen who is digitally literate.”

According to Reynar, this is a low-risk and low-cost gamble. To get the system up and running, the town simply redeployed a few current employees to work on it with Canadian payments processor Coinberry Pay.

Reynar was intrigued by the savings that a peer-to-peer system like Bitcoin could pass on to residents. Right now, if residents choose to pay online for municipal services using a credit card, they pay transaction fees ranging between 2.5 and four percent. On a tax payment of $1,000, that’s $40 in fees alone. By using Bitcoin, users are paying the processor 0.5 percent to transact—on a $1,000 payment that comes to $5 in fees.

Innisifil isn’t exactly a secret enclave of crypto users, but Coinberry CEO Andrei Poliakov says there are a surprising number of Bitcoin-savvy people there. “When I first got an in-person audience with staff this year, I was pleasantly surprised to find that out of the five people around the table, all five of them actually own crypto.”

Crucially, just because residents can pay their taxes in Bitcoin doesn’t mean the local government will be holding. The system is designed to minimize Innsifil’s exposure to Bitcoin’s notoriously volatile price swings. Coinberry Pay takes the payment in bitcoins and turns it into Canadian dollars, which is then deposited in the municipality’s bank account.

With the sudden and messy collapse of Canada’s biggest cryptocurrency exchange, QuadrigaCX, still fresh in people’s minds, Reynar says projects like this make it easy for Bitcoiners or the crypto-curious to do something normal and safe with digital money—like paying taxes to the township.

This isn’t Innisfil’s first foray into headline-grabbing uses of new technology.

The town made headlines in 2017 when it began using Uber to provide public transit, instead of starting a bus line. The approach was criticized for leaving too much public responsibility in the hands of the fickle private sector, but residents seem pretty happy with it—a recent survey shows the satisfaction rate with the service at 70 percent. Based on the latest report on the project, the partnership with Uber saves the town millions of dollars annually compared to a bus service.

Like the Uber partnership, Reynar said he hopes that the cryptocurrency pilot will also snowball into something bigger in the future.

Poliakov told Motherboard that the township is laying down the infrastructure to be able to eventually accept other forms of cryptocurrency payments, such as Ethereum or Bitcoin Cash.

“Our belief is that a hundred percent of the population will use some form of digital currency—I’m not saying it’s going to be Bitcoin—to transact in the future,” Poliakov says. “In order to allow people to spend their crypto, it’s like the chicken and the egg, which came first? You have to start somewhere.”

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