There has been much misinformation, scare tactics, gaslighting, false and incomplete statements made by some councillors and tourism industry groups opposed to the town’s municipal accommodation tax.
As well, there was an unsolicited, skewed tourism survey bought and paid for by tourism special interests.
So, I feel compelled to explain the tax and present the ratepayers’ side of the issue.
Let’s start by debunking some of the industry gaslighting. First and foremost is the notion that the tax will kill the accommodation industry, where currently in Niagara-on-the-Lake one owner controls the highest percentage of rooms and holds much influence in the Chamber of Commerce and marketing decisions.
This little chestnut is pure nonsense promoted principally by the hoteliers and B&Bs.
Visitors to premier destinations don’t make decisions based on taxes.
Every major tourist destination has an accommodation/tourism tax and the tax has never been a deterrent. Here are a few tax examples from well-known destinations that present a similar tourism profile to NOTL: Prince Edward County (wineries) 4 per cent; Napa Valley (wineries) 13 per cent hotel/bed tax; Stratford (Shakespearean festival) 4 per cent; Williamsburg, Va., (history/heritage) 5 per cent hotel tax + $2 per day room tax.
Second is the argument (espoused by the special interests and some councillors) that this is just a NOTL tax grab to be used to offset town operations. This is completely incorrect.
Accommodation tax revenue, by legislation, must be shared with a destination marketing organization, kept separate from all other town revenue and used to promote programs, capital projects and services that visitors take advantage of when visiting NOTL (e.g. roads, culture, parks, public bathrooms, natural areas and recreation).
The tax allows the town to determine the incremental costs of these tourism services and then to offset those costs. This will ensure tourists pay their fair share of the infrastructure they use – an amount that ratepayers now wholly pay.
Tourists do not pay for tourism, as incorrectly stated by the CEO of the Chamber of Commerce. Residents pay for tourism. Period.
Now let’s look at the financial aspects of the tax.
In December 2019, town staff report CS-20-001 projected 2020 revenue to be $2 million to $3 million annually.
Ratepayers currently pay about $1 million per year for tourism-related costs. Here are a few documented factors:
$630,000: Direct tourism -elated initiatives as per staff report CS-20-001
$118,000: Grant to the Chamber of Commerce
$35,000: Grant to the Shaw Festival
Council passed a resolution and instructed the CAO to establish an accommodation tax governance group made up of tourism stakeholders, including ratepayer representatives.
This group would oversee tax-related activities and develop criteria on how to determine where funds are invested. The focus of this group will be to use the funds to benefit tourists and residents.
The use of accommodation tax revenue must be fully transparent. The town own must account for and report accommodation tax activity separate from other revenue and unused money must be held in a reserve account.
It is my belief, and that of many ratepayers, that tourism tax revenue should first be used to offset these tourism services costs that ratepayers have been funding for years.
While the allocation of the new tax revenue toward offsetting the estimated $1 million in operating costs will reduce the ratepayer portion, it is unclear on how much of that saving will filter down to an actual tax saving since the overall operating budget includes cost increases not directly related to tourism.
However, a review of 2020 budget document FC-19-013A should give some indication of possible tax savings.
Specifically, recommendation 1.5 states – “Council approve an allocation of $400,000 from potential municipal accommodation revenue to the operating budget, reducing the operating levy increase from $1,167,601 to $767,601 (8.61 per cent increase after assessment growth reduced to 5.14 per cent).” A saving of 3.47 per cent.
The lord mayor and council must put ratepayers before the special interests by first approving a more aggressive ramp up to 4 per cent as suggested by Coun. Sandra O’Connor, expand the tax to all tourist rooms and immediately codify the use of tourism tax revenue to first offset ratepayer taxes, before any new tourism projects are considered.