Municipal Accommodation Tax

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BACKGROUND INFORMATION

On November 13, 2017, staff provided a preliminary report to Council (see Document Library) regarding information surrounding Bill 127 - "A Stronger, Healthier Ontario", which received Royal Assent on May 17, 2017.

Bill 127, "A Stronger, Healthier Ontario", granted authority to Ontario municipalities to impose a mandatory Municipal Accommodation Tax which would apply to hotels, motels, bed and breakfasts and all other accommodation types that rent rooms for under 30 days.

A report was prepared by staff for the January 22, 2018, Committee of the Whole Meeting. The report requested direction from Council as to whether or not to move forward with implementing the tax. At this time the Committee received the report and took no further action.

The minutes from the January 22, 2018 Committee of the Whole meeting were approved at the February 12, 2018 Council meeting for Council's consideration.

Council approved the amended recommendations contained in Report CS-18-002 which stated:

"that Council receive the report and take no further action at this time."

BACKGROUND INFORMATION

On November 13, 2017, staff provided a preliminary report to Council (see Document Library) regarding information surrounding Bill 127 - "A Stronger, Healthier Ontario", which received Royal Assent on May 17, 2017.

Bill 127, "A Stronger, Healthier Ontario", granted authority to Ontario municipalities to impose a mandatory Municipal Accommodation Tax which would apply to hotels, motels, bed and breakfasts and all other accommodation types that rent rooms for under 30 days.

A report was prepared by staff for the January 22, 2018, Committee of the Whole Meeting. The report requested direction from Council as to whether or not to move forward with implementing the tax. At this time the Committee received the report and took no further action.

The minutes from the January 22, 2018 Committee of the Whole meeting were approved at the February 12, 2018 Council meeting for Council's consideration.

Council approved the amended recommendations contained in Report CS-18-002 which stated:

"that Council receive the report and take no further action at this time."

Q&A

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    What will happen next about this tax? What was decided by the Council? I know that 17 out of the 18 speakers at the Town Meeting were, one way or another, against the tax.

    TreeHugger Asked over 2 years ago

    The meeting on Monday the 22nd was the Committee of the Whole. The decisom at that meeting was to take no further action. This decision will be forwarded for adoption to the February 12th Council meeting. Council will consider this recommendation at that meeting. 

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    Peter, early you mentioned "Ideally the implementation of a tax would make the identification of unlicensed operators easier." The question is how. Just log on to airb&b...there are many unlicensed operators out there. They don't list the address or pictures of the house exterior. Unless airb&b is willing to share their address with the town. It's hard to enforce. My concern is tourists don't want to pay extra tax. If the legal operators are all charging, it will encourage people going to the unlicensed operators that don't charge the tax. I support the tax if the town can close down all the unlicensed ones.

    Christine Asked over 2 years ago

    That response was meant to mean that the funds from a tax would assist in enforcement efforts, and potentially the increase of resources to that department for the specific purpose of enforcing unlicensed operators. Additionally, Air BNB has made it public that they are willing and able to remit such a tax to municipalities on behalf of owners. There may potential to identify unlicensed operators through such an arrangement. Also my understanding from Air BNBs comments, they are able to apply the mandatory fee to all listings within a geographic area, licensed or unlicensed. 

     Depending on what type of information is supplied to the Town we could reference this to our list of licensed operators and possibly determine who is unlicensed. Additionally, the funds from the tax could support greater resources related to enforcement enforcement of rentals.

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    I have two questions: 1. Would this MAT apply to short term rentals involving AirBnB or similar type services? 2. Do AirBnB type rentals require a licence to operate? Thank you.

    MarkBrown Asked over 2 years ago

    1. In answer to your questions, the legislation does not exempt short term rentals, including those advertised on Air BnB. However, the local by-law must establish who the tax would apply to, and there is flexibility to allow Council to make this determination. 

    2. All short term rentals in Niagara-on-the-Lake offering room rentals for a period of 28 days or less are required to obtain a license by the municipality. Please see our website for more info by clicking here.

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    I am a B&B owner ... in fact, this is our 14th year, so I'm no newbie. I'll keep my opinions for the "What do you think ?" section of this site, but I do have a few questions, assuming that the MAT is implemented (which I truly hope is not the case). 1. GOVERNANCE: What would the governance processes around this new tax be ? What systems would be required for collecting, reporting, and disbursing the tax back to the town ? What evidence would be required of what we've collected, and to what degree of detail ? What would be the mechanism that the Town would use to "recoup" the taxes that B&B owners have collected ? 2. LEGALITY: There are undoubtedly some "un-registered" and "un-licensed" accommodation providers out there. What would prevent them from collecting this tax and not reporting it to anyone ? Do you plan on having some sort of "license to collect" that would need to be displayed, so that guests know that the MAT is being collected legally ? 3. ATTRIBUTION: As a B&B owner, I can tell you that one of the things that we pride ourselves on, is providing a pleasant experience. It is not a pleasant experience to tell guests that they need to pay more money. In the afore-mentioned "license" document, would there be an explanation around why the MAT is being collected, so that guests can read it and see that it is a Town directive ? 4. TIMING: When would this come into effect ? I have quite a few guests already booked for this upcoming season. We would not be able (or more precisely, we *should* not be able) to charge them the tax if the tax didn't exist when they made the reservation. 5. EXCEPTIONS: There is mention as I understand it, that exceptions could be made on a case-by-case basis ... I would want to know what that exception process is, including the criteria that go into the decision-making process. Would the Town be publishing that exception process and the criteria ? Believe it or not, a few dollars make a difference, and if one B&B doesn't charge the MAT and the other does, often the guest will choose the B&B that doesn't. 6. TRANSPARENCY: Although I'm not a member of the Chamber of Commerce, I have nothing against them necessarily in partnering with the Town in splitting the profits over the MAT. However, I do have some concerns that the Chamber does not represent B&B owners very well, and I would want to get some sort of description of what the Chamber is doing with the money that directly helps the B&B community, through a quarterly or yearly "MAT Proceeds" report of some kind ... is the Chamber willing to do that ? Also, I'm assuming that just because the Chamber would be partnering with the Town on this, it would not mean that I would need to become a member of the Chamber...please confirm ... OR alternatively, if the Chamber is profiting from my very existence shouldn't I automatically become a member of the Chamber at no charge ? 6. ANONYMITY: The taxes that are collected by individual accommodation providers, because it is percentage-based, could be used to determine the associated revenues of those providers. What guarantees do we have that this information will not be shared with anyone, or be used by the Town or the Chamber in making policy decisions ? That's it for now.

    avineyardview Asked over 2 years ago

    1. The accommodation operators will be responsible for collecting the tax and remitting it to the Town or delegated authority.  At this time a model for administration of the tax has yet to br established. These details would be addressed through a by-law. Should Council commit to a tax then staff will engage the industry prior to developing such a by-law.  As you are aware short term rental operators are currently required to keep a daily registry of guests, the recording of tax collected could be included within that document. It is possible that a monthly or quarterly intake form would be supplied to the town. Again these details would be addressed through a by-law which would be developed should Council commit to the implementation of a tax.


    2. Ideally the implementation of a tax would make the identification of unlicensed operators easier. Operating an unlicensed short term rental and not remitting the taxes collected are both punishable offences. Also Council could use the funds from the tax to strengthen the towns enforcement efforts. 


    3. As mentioned  these details have yet to be considered as there has been no commitment from council. However should Council commit to a tax these comments will definitely be considered in our development of the by-law

    4. Existing bookings made prior to the passing of a by-law would be exempt from the tax. It would only apply to bookings following the implementation date. A date has yet to be decided by Council. The legislation permits municipalities to implement the tax starting December 1, 2017.

    5. The exceptions would not apply to specific establishments but rather it would be applied generally based on criteria such as all short term rentals with 3 or less rooms, campsites etc. 


    6.  Again these details have not been confirmed. Council through a by-law would have to recognize the Chamber of Commerce as the ‘eligible tourism entity’. At this point staff are recommending the Chanber of Commerce. Your suggestions of quarterly or annual reporting are reasonable and great a suggestion. We will consider these comments should Council commit to the implementation of a tax.

     7. Any disclosure of information would be in accordance with MFIPPA legislaslation and would not be able to be tied to a specific individual operator. 

    Please in the future provide questions individually to allow the public and staff to read more easily. Thank you for the great feedback.

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    In the new provincial legislation it says that a municipality may choose to implement the tax. To me that is saying that you don't have to do it. Why is it that NOTL is implementing this? It does not seem right to be taxing a small B&B or vacation rental and a large hotel the same! Ontarios small business really seems to be under attack lately and is making it more difficult to start out or grow at all. I know and understand that the stipulations for the regulation still are needing to be determined by council, but I hope they take into consideration all the costs with this that are already associated.

    Josh Asked over 2 years ago

    You are correct, the application of the tax is not mandatory. It is a new discretionary tax which municipalities have the ability to implement beginning December 1, 2017. Council has not decided to implement the tax. The report that will be discussed on January 22, 2018 requests a commitment from Council which could be defeated. 

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    I am a private licensed 3 room B&B in Niagara on the Lake and I very concerned with and additional tax directed at our guests. We are continually bombarded with additional operating costs and I believe that we are reaching a point where 'value for money' will be negatively impacted and the affordability for future guests will be impacted with a very real possibility of declining visitor numbers, particularly from our domestic Canadian sector. With the need to stay competitive we are already paying 15% booking fees (an online marketing cost), credit card fees and licenses. The idea to raise a tax to locally compete with well funded, international booking sites is, in my view, a complete waste of resources, mis-directed and potentially damaging to our value offering. My questions are: Will non-commercial, private Bed and Breakfasts be included in this tax? Is this tax intended to fund the Chamber of Commerce (which in my view is already in a conflict of interest and should be concentrating on traders interests ie: less taxation) or a newly formed tourism body?

    Maurice Tarlo Asked over 2 years ago

    Thank you for your comments. In answer to your questions, the legislation does not exempt short term rentals, including 'non-commercial'  zoned privately owned bed and breakfasts. The local by-law must establish who the tax would apply to, and there is flexibility to allow Council to make this determination. 

    The legislation states that all municipalities that adopt the MAT and that have an existing Destination Marketing Fee (DMF) program in place would be required to share their MAT revenue with the appropriate not-for-profit tourism organization in an amount that matches the total revenue generated by the existing DMF program. For local municipalities where such a program does not exist (such as the Town), at least 50% of the MAT revenue would be shared with the respective eligible tourism entity.

    Therefore, should Council adopt a MAT, at least 50% of the revenue would be shared with an eligible tourism entity. The regulations define an eligible tourism entity as "a non-profit entity whose mandate includes the promotion of tourism in Ontario or in a municipality". Currently the Town has a Fee for Service Agreement with the Niagara-on-the-Lake Chamber of Commerce which indicates that the Chamber, on behalf of the Town, shall provide services including but not limited to visitor services, tourism marketing and promotion programs. Additionally, the Chamber has acted as a Destination Marketing Organization (DMO) for the Town and previously has administered destination marketing programs for the Niagara-on-the-Lake tourism promotion. At this point staff is recommending that the Chamber of Commerce act as the eligible tourism entity should Council implement the tax. 

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    is the January 22 meeting to be held at the town council chambers?

    ABishop Asked over 2 years ago

    Yes, at 6:30 p.m.

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    Will the 4% be added to extra amenities such as parking and WiFi? A larger hotel may charge extra for these, however a short term rental would include these in the price. Therefore a visitor may pay more tax to a short term rental and thus a higher, less competitive price, compared to a hotel.

    JasonC Asked over 2 years ago

    The tax would only be applicable to the fees associated with the rental rate of the room. Additional optional fees would not apply such as wifi, parking, resort fees etc. 

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    Where can the report FC-17-012 be found on the NOTL.org website?

    JasonC Asked over 2 years ago

    Thank you for asking this question. The report can be found on the agenda for the January 22 Committee of the Whole meeting, click here for the agenda. Additionally, the report has been added to the document library on this page. 

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    Will the addition of a tax reduce or eliminate the yearly fee that is charged to short term rental properties?

    JasonC Asked over 2 years ago

    Currently there is nothing in the legislation that prevents the Municipality from applying a Municipal Accommodation Tax in addition to the licensing fees. However, the option is available to Council to eliminate the licensing fees should a tax be implemented. Staff appreciate this information and should council commit to implementing a tax, this is something that will be considered in the report to be prepared for Council.