Council wants a third round of debate about an accommodation tax that could benefit municipal coffers, although many in the tourism industry have said in earlier debates it will do more harm than good.
The previous council twice raised the issue of imposing a tax on hotel rooms, bed and breakfasts and short-term rentals — first in January 2018, and again last August.
The January report was shelved, and in August the discussion gained no traction, dismissed as an eleventh hour attempt to overturn the January decision before the election.
Both times it elicited strong opposition from hotels, the Niagara-on-the-Lake Chamber of Commerce and owners of rental properties and B&Bs.
Last year’s recommendation discussed by council was for a four per cent tax, half of the proceeds to go to the Town, and half to the Chamber of Commerce to bolster tourism.
Last week Coun. Norm Arsenault put it forward again, asking for a subcommittee of three councillors and some staff to review the January report and look at how other municipalities handle the extra charge.
The first discussion in 2018 was bad timing, said Arsenault, coming after the hike in minimum wage.
Coun. Wendy Cheropita, named to the subcommittee along with Arsenault and Coun. Allan Bisback, said the review would include discussions with hotel representatives and the chamber, looking at “both sides of the coin.”
Arsenault said although he’s not convinced the situation is unchanged from last year, the extra tax “remains a big ‘if’ at this point.”
Any Town revenue from the tax would be targeted at tourism-related costs, rather than used as general revenue, he said.
“Nobody likes taxes, but if it’s targeted, designed to go to tourism infrastructure, it might make sense. We’re hoping to bring everybody in to discuss the issue again, from a different point of view. We want to engage residents as well — to set a process in place that will be a win-win situation,” said Arsenault.
Residents want to see a portion of the cost of tourism paid by tourists, he said.
“But we’re only thinking about it at this point,” he stressed.
Janice Thomson, chamber president, spoke to councillors last August to oppose the tax. Nothing has changed since then, she said — the chamber continues to be against it.
The Town receives more than $2 million annually from bus parking, parking meters, and the provincial gas tax rebate — revenue that stays in town, rather than being split with the Region, she said.
When municipalities were granted the authority to implement an accommodation tax, there were certain principles the Ministry of Tourism attached to it, including that it ensure the maintenance of a “stable, vibrant tourism environment.” Based on feedback from chamber members and a professional analysis of the impacts of Bill 148, which introduced an increased minimum wage and other legislated requirements for businesses, “it is not appropriate to burden visitors with additional taxes,” she said.
Bob Jackson, CEO of Vintage Hotels, also continues to oppose the tax — his view hasn’t changed since the issue was first discussed last January.
“One of the disappointments to us was that when it came up last year, there was no consultation with businesses beforehand,” he said.
Vintage hired the Canadian Centre for Economic Analysis to look at the issue, “at considerable cost to us,” he said, and received a data-driven, factual report which “unequivocally” determined the extra tax would be economically detrimental to NOTL — not just for the accommodation sector but for all businesses.
The analyst estimated changes to provincial labour laws could reduce the number of overnight visitors by almost 4,000 per year, and an added tax could double that, costing local businesses $3.4 million annually.
Jackson said he is both surprised and disappointed the subject has come up again.
“It’s a new council, and I hear they’re talking about tourists paying for infrastructure through an accommodation tax, but I think in all honesty that is misguided.”
Overnight guests drive to town, park their cars, and walk or take shuttles from there. They contribute substantially to the economics of the town and put little demand on infrastructure — that comes more from the day-trippers and tour buses, he said.
“This is an issue we feel strongly about,” said Jackson.
He’s glad council is planning on engaging with the hotel industry and other businesses, he added, but “I would rather not be having this discussion again.”