GTHA UPDATE on HOTEL TAX:
Toronto, Ontario - October 3, 2017:
Further to the announcement of the 2017-18 provincial budget, the government of Ontario has provided permissive authority to municipalities to implement a new municipal sales tax on transient lodging.
To clarify, permissive authority does not require municipalities to implement the tax.
As you are aware there are some municipalities currently who are looking at the potential of the implementation of the tax including the City of Toronto and the City of Mississauga in our membership area. Others outside the GTA are also reviewing this option.
The legislation has passed however it is not in full force and effect until the final regulations have been approved. These regulations will actually provide more detail on what municipalities would have to do to implement the tax and will give us a better sense of the impact on the hotel community and our destination sales and marketing initiatives that drive our business and grow municipal and provincial economies. GTHA has been very involved with our provincial association ORHMA and other industry organizations providing advice on the regulations to the government.
We will keep you informed as soon as more information becomes public and the provincial government signals its intent with the completion of the regulations.
GTHA Responds to New Tax on Hotels in 2017/18 Provincial Budget
Toronto, Ontario - April 27, 2017:
Today, Ontario Finance Minister Charles Sousa released the 2017-18 provincial budget announcing a new sales tax on hotel rooms in Ontario. This new sales tax is to be added to the 13% Harmonized Sales Tax (HST) currently applied to every hotel room in the province. The imposition of this tax with no defined amount and no cap has the potential to bring the total sales tax on a hotel room to an unprecedented high.
Today’s budget measure will have a direct impact on Ontario families as 50% of hotel room nights consumed in Ontario are by Ontario residents. Taxing the family vacation, and imposing additional burdens on small businesses runs counter to the Government’s objective of helping to build Ontario up.
GTHA President & CEO Terry Mundell commented “the introduction of a new hotel tax in Ontario has the potential to seriously reduce the competitiveness of Ontario’s tourism sector. It is unclear why the tourism sector has been singled out for a tax increase, while other sectors are being supported and bolstered with provincial incentives to ensure their sustainability. We are disappointed the Wynne government has added a new sales tax that consequentially provides a competitive advantage to other jurisdictions across Canada and the United States. Our ability to bring world class events to Ontario is severely constrained and will directly impact Ontario’s economy.”
Mundell went on to comment that “there is insufficient detail in today’s budget to understand the tax measures applicable to the home sharing economy. This sector, while the fastest growing accommodation sector in the Greater Toronto Area (GTA), does not pay equivalent taxes, nor HST, which means foregone revenue dedicated to vital services such as health care, education and infrastructure. It is incumbent upon the Province to provide assurance that the home sharing economy will pay its fair share.”
About the GTHA
Founded in 1925, the Greater Toronto Hotel Association has been serving the hotel industry of the Greater Toronto Area for over ninety years. A major stakeholder in the tourism industry, the GTHA is the voice of the Greater Toronto Area's hotel industry, representing 170 hotels, with approximately 36,000 guest rooms and 32,000 employees. The GTHA enables competing hotels to work together on issues of public policy and charitable ventures, provides information and service to its members, and raises the profile of the hotel sector as a vital component of the Greater Toronto Area's tourism industry.
Emily Dickson, Director of Executive Office, Programs and Events
City of Toronto Revenue Tools: Hotel/ Lodging Tax
The City of Toronto is currently reviewing a variety of new revenue tools including a hotel/lodging tax on room revenue in all hotels in the City of Toronto.
As the City currently does not have the authority to implement a hotel/ lodging tax they are considering a request to the province to amend the City of Toronto Act (COTA) to provide them the taxation authority. The GTHA is opposed to any amendments to the City of Toronto Act and the Ontario Municipal Act that would provide the City of Toronto or any municipality the power to implement a hotel/lodging tax. In addition, there are a variety of other proposed taxes which would impact the hotel community such as Beverage Alcohol Tax, Parking Tax.
The City of Toronto Act is very clear as Section 267 (6) states:
“The city is not authorized to impose any of the following taxes:
6. A tax imposed on a person in respect of lodging in or the use of the rooms or other facilities of a hotel, motel, hostel, apartment house, lodging house, boarding house, club or other similar type of accommodation, including a tax in respect of services provided by the owner of the accommodation that are related to the lodging or that are related to the use of the rooms or other facilities, but not a tax described in subparagraphs 5 i to iv.:”
The GTHA is opposed to any amendments to COTA that will allow the City to implement a lodging/ hotel tax and supports the current exclusion under Section 267 (6) of the Act.
The Toronto accommodation industry participates in a very competitive international, national and provincial marketplace. The Toronto region tourism sector is a major contributor to the region’s economy with total visitor spending of $7.2 billion in 2015. This spending is across a range of businesses including accommodations, attractions; restaurants, taxis, retail and entertainment which combined employ 315,000 people.
Any addition of a new hotel/lodging tax will cause job loss, reduction of foreign direct investment in the hotel industry and other economic harm.
UPDATE ON PROPOSED HOTEL TAX
On December 13th, Toronto City Council met to discuss the City’s Long-Term Financial Plan and new revenue tools.
At this meeting the City of Toronto Council voted in favor of requesting the authority from the Province of Ontario to implement a hotel tax of 4%. The hotel tax revenues will be used by the City for their operating budget, not for any of the $33 billion capital requirements.
The resolution passed at City Council also included the implementation of a tax on lodging applied to short-term rentals and requested that the City Manager report back on a recommended tax rate no higher than 10%.
The City of Toronto does not have the authority to implement a hotel/ lodging tax under the City of Toronto Act (COTA). The City of Toronto has requested from the Province of Ontario a legislative amendment to COTA to provide them the authority for a hotel tax.
The GTHA opposes any amendments to the COTA by the Provincial Government to give the City the authority to implement a hotel/ lodging tax.
Council also voted in favor of requesting the authority from the Province to implement road tolls on the Gardiner Expressway and Don Valley Parkway. The Province has declined this request.
GTHA will continue to keep its membership informed on this important issue.
A study has been prepared for the City of Toronto by KPMG evaluating the potential revenue tools, including the hotel/ lodging tax. The full study can be found here.
KPMG 2nd Report: Additional Economic Assessment November 2016