Municipal accommodation tax in effect Feb. 1, 2021

UPDATE SEPT. 22: A municipal accommodation tax (MAT) of four per cent will go into effect Feb. 1, 2021 in Prince Edward County.

Council approved the implementation date at Tuesday’s meeting.

The municipality will create a plan for distributing the MAT funds. Under provincial legislation, 50 per cent of MAT funds must be used by the municipality for infrastructure or services that support tourism. The remaining 50 per cent is to be used by an eligible tourism entity to support tourism promotion and development.

Throughout October and November, staff will consult the public as well as stakeholders in the accommodation and tourism sectors. That feedback will inform recommendations that will go to council for consideration in early 2021.

The MAT applies to all roofed accommodations provided for a continuous period of 30 days or less. The tax only applies to the accommodation fee.

Exemptions include a tent or trailer site supplied by a campground, tourist camp or trailer park, and employers to their employees in premises operated by the employer. Accommodation bookings with signed contracts prior to the date the bylaw takes effect, whether paid partially, or in full.

Visitors who stay at motels, hotels, inns, bed and breakfast establishments, and private, short-term accommodation (STA) rentals will pay the tax. The tax will be added to guest invoices, and accommodators will be required to remit the MAT to the municipality.

UPDATE SEPT. 3: Councillors approved February 2021 for the new Municipal Accommodation Tax start date.  The motion goes to the Sept. 22 meeting of council for approval.

Councillors to hear options of start dates for municipal accommodation tax

SEPT 2: Members of the County’s accommodation sector seek further delay of implementing a four per cent Municipal Accommodations Tax (MAT) – to 2022 – citing concerns of additional waves of the COVID-19 pandemic, and revenue short-falls.

Respondents also suggested holding off until the licencing program for STAs is reviewed (expected January 2021) and all licences waiting in queue have been completed. A tourism management plan is also expected to come forward to council in January 2021.

Survey findings and feedback received from about 220 people in the accommodation sector in August indicate the pandemic caused significant challenges and revenue short-falls in 2020 and 2021, they suggest, is too early to implement the new tax.

“It has been conservatively estimated that the MAT will bring in roughly $850,000 annually in new revenue,” stated Ashley Stewart, Destination Development and Marketing Co-ordinator, in her report for Thursday’s Committee of the Whole meeting.

There are approximately 730 accommodation options in the County – including 18-20 inns/motels/hotels; 70-80 B&Bs; 35 cottage/resorts and roughly 600 STAs.

At its April 15 meeting, council approved enacting MAT, but delayed the planned June 1 start date until economic recovery from COVID-19 was under way. A minimum of 90 days notice is to be provided before MAT takes effect.

Stewart stated municipal staff conducted a survey of the accommodations sector Aug. 17-26 to get a sense of the industry outlook through the fall; accommodation revenue compared to 2019, the preferred implementation date of MAT, and general feedback.

“It is important to note that the majority of the survey respondents represent STAs (86.5 per cent, or 181 respondents.”

Over half of respondents stated they have very few bookings (31.13%) or are somewhat booked (25.94%) through to November 2020. Another 13.21 per cent noted they chose to forego offering accommodations this year as a result of COVID-19. Almost four per cent reported they were fully booked through to November and 13.21 per cent stated they were mostly booked.

Answering how 2020 revenue compared to 2019, 53.77 per cent stated is was significantly lower; 20.75 per cent said somewhat lower and almost 10 per cent stated there was no change. Significantly higher revenue was reported by .47 per cent while somewhat higher revenue was reported by 5.19 per cent.

Answering when MAT tax should be introduced, 29.9 per cent said Jan. 1, 2020; 2.58 per cent picked Jan. 15, 2020 and 67.53 per cent chose February 1, 2020. The desire to delay MAT until 2022 was expressed in the open-ended question in the survey.

Contemplating risk factors of decisions, Stewart noted delaying the MAT results in loss of revenue to the municipality, could leave a perception of not supporting accommodators through COVID recovery and also perception of not supporting needs of the community by further delaying implementation.

“In the event MAT is not implemented, there will likely be frustration from residents after a particularly challenging summer from tourism,” she states, adding “Implementing the MAT could be perceived as not being supportive to the accommodation sector.”

If MAT is implemented, risks will be mitigated, she said, by providing clear timelines and guidance on remittance processes to make the transition as efficient as possible.

Following direction of council, industry and public consultation will continue during the fall to determine how MAT revenues should be used, and allocated. Consultation will be open to the public as well as the tourism industry as a whole.

Committee of the Whole meets Thursday and will discuss options of implementation dates, or delaying MAT.