Council has set a deadline for next January to extend its hotel room tax to cottage rentals and bed and breakfasts, most of which do not currently collect the tax.
“Hopefully, seven months is enough time and will put a little fire under everybody,” said Coun. Maria Mavridis, who brought the motion to council Tuesday morning.
Under the existing rules, only businesses with more than five rooms have to collect the tax, an additional two per cent of the advertised room rate.
Mavridis suggests the municipal accommodation tax be “applied to all accommodation establishments, including all those with less than five rooms.”
Council introduced the room tax and its current rules in June 2022 to bring in additional revenue and help promote the town’s festivals and other tourist attractions.
At that time, councillors decided to exempt small operators from collecting the room tax because many were struggling to sustain business during the pandemic.
The Lake Report found that under the current system only 36 of 347 short-term rentals are expected to collect the tax.
According to staff, tax collections on these rooms could rake in an additional $600,000 in revenue for the town.
Meanwhile, hotel operators argue if the room tax is here to stay, the town should collect it from short-term rentals as well.
Even industry stakeholders like David Levesque, a member of Stay Niagara-on-the-Lake (an association for short-term rental operators), told council it has “long seemed inevitable” small operators would have to start charging the room tax to guests.
Coun. Gary Burroughs supported Mavridis’ motion to extend the tax to the currently-exempt small bed and breakfasts, but wanted two committees up and running before the change next winter.
The first committee will oversee the use of the room tax. Burroughs pointed out this term of council has yet to form the committee.
Burroughs also wants to reinstate the old short-term rental committee, which would work with the wider industry to ensure it was prepared to start collecting the tax.
Both he and Levesque were part of the short-term rental committee in 2021.
The committee brought 33 recommendations to council on July 26, 2021 which were then given to staff for input.
Burroughs said he asked for a status update on these recommendations 10 ten times since but has yet to see them return to council for discussion.
Levesque agreed with Burroughs on reinstating the short-term rental committee.
After some discussion, council amended Mavridis’ original motion to also reinstate the short-term rental committee.
“Another consultation process with the accommodation sector is needed before going forward,” said Levesque.
He argued that smaller operators struggle to implement the town’s room tax because the computer systems they use to run their businesses are not always advanced enough to calculate the tax in its current form.
“I’m concerned that you’re spending so much time on complicated computer programs when I’m not sure it’s that difficult on individual operators,” Burroughs said.
Levesque said he wants to give people the tools they need to make this work so it’s “not a complete headache for everyone.”
Burroughs said he did not think it would be such a big headache.
Levesque said he was not against extending the tax to short-term rentals but wanted to make sure all parties were “going with this idea together” and “doing what’s needed to make it work.”