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Municipality proposes studying new tax to be paid by visitors

The municipality’s Community Development Department is recommending council direct staff to develop a proposal to introduce a Municipal Accommodations Tax (MAT) – which is levied on visitors, rather than locals.

At Thursday’s Committee of the Whole meeting, staff will show that the projection of gross revenue from MAT in the County could translate annually to approximately $836,500. The projection is based on estimates for annual occupancy percentage of 53 per cent; average daily room rate of $175 and average annual short-term accommodation income of $7,800.

During recent consultations regarding short-term accommodations, there was significant feedback on the need for the County to explore the MAT.

In December 2017, the Ontario government passed legislation that gives municipalities the authority to implement MAT, potentially representing a significant new revenue source for the municipality.

Staff is recommending an internal task team study transient accommodation tax in consultation with the accommodations sector – considering implications on the economy, administration costs and how to collect it.

Todd Davis, Community Development Supervisor, notes in his report there is a distinction to be made between MAT and ‘Destination Marketing Fees’ (DMF) which are already in place across the country.

DMF are industry-led initiatives collected by tourism operators on a voluntary basis. The funds give accommodation providers and tourism operators a means to support regional tourism marketing. The fees are not legislated by the government and the money collected do not go to provincial or municipal governments. The fees typically appear on invoices from the hotel, restaurant or attraction.

“A DMF has not existed in Prince Edward County until quite recently, with the newly
formed Prince Edward County Accommodation Association (PECAA),” Davis states. “Prior to the formation of this new group, a limited number of local accommodators contributed to the Quinte Accommodations and Attractions Association (QAAA) – a DMF composed of
mostly branded hotel members within the Bay of Quinte region. Fees collected by their
members were remitted to QAAA and used to market the area through the Bay of Quinte
Regional Marketing Board. ”

Davis explains that through amendments to the City of Toronto Act and the Municipal Act last December, single and lower tier municipalities can impose a tax on transient accommodations – including any roofed accommodations that rent consecutive room nights of less than 30 days.

“The municipality has discretion to decide to which types of accommodations an MAT is applied; however, the tax can only be applied to accommodation charges – not to food or other services,” Davis’ report states. “The municipality sets the tax as a percentage of room cost and it is charged to the customer on the bill much the same as HST. While many jurisdictions are currently charging four per cent for a MAT, municipalities also have discretion to set this rate as they see fit. The operator is responsible to collect and remit the collected tax to the municipality. ”

Online booking platforms often collect and remit a MAT on behalf of a municipality. In other instances, the municipality may contract the tourism entity or other group to collect and remit.

The new legislation stipulates the municipality must provide a portion of the MAT funds to an eligible tourism promoting entity within the community – such as destination marketing, regional tourism or other not-for-profit marketing organizations.

Remaining funds, minus collection and administration costs, can be used at the discretion of the municipality.

Subject to council’s direction the task team could meet over the first quarter of 2019, in consultation with the accommodation sector, with the intent of bringing a proposal to council by the end of the second quarter 2019.

Filed Under: Local News

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  1. sue says:

    Infrastructure (roads/sewers), emergency services (police,fire, ambulance) waste (garbage/recycling) and water costs are increased exponentially by the tourist population. As a tax payor, I’m tired of flipping the bill, whilst my sewer and road remain a mess and are in dire need of repair. I’m tired of going to the waste station only to be turned away because it’s filled up. It’s cheaper to buy water than turn my tap on. Many folks like me do not benefit from the tourism industry in PEC – and I’m tired of paying for it. My family has called this home for many generations however I barely recognize it. I wonder, does anybody on council really care about what has happened in this place we love and call home? I challenge each and every member of council to put forth their true intentions about what they expect in return for their seat on council.

  2. Steve Staniek says:

    So who’s been paying for all the advertising campaigns promoting tourism in PEC, which really only benefits a small sector, while disadvantaging others?
    Did the Main Street business community pay their way, or did County residents have to cover those costs too? Now that the accommodation industry has grown into a thriving County enterprise, will business interests from all sectors: commerce, industry, farming, be combined, and treated fairly and equally?

  3. Chris Keen says:

    This is a start, though only half the funds can be used as the County wishes; the rest must be used to promote the County to attract more tourists. So it’s not $800,000 but $400,000 for the County. Too bad this MAT can’t be collected from Sandbanks.

  4. sue says:

    Finally, I sensible approach to offsetting taxes in an overburdened community.

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