Mayor John Tory pushes hotel tax to raise needed revenues

Debate over new taxes and fees returns to council later this year, with Tory eyeing a charge on rooms.

Thestar.com
June 2, 2016
By Jennifer Pagliaro

A hotel tax in Toronto is high on Mayor John Tory’s preferred ways to raise badly needed funds at city hall.

But it won’t be nearly enough to cover the gap that senior city officials have warned must be addressed head-on later this year.

A hotel tax topped the list of requests made by Tory at a meeting with Premier Kathleen Wynne earlier this year and with her government as early as November, according to briefing notes first obtained by the Toronto Sun through a freedom of information request.

Those notes and emails within the premier’s office in February indicate Wynne is prepared to make the necessary changes to the City of Toronto Act needed for that tax to be collected.
“We are interested in working with the city on this revenue tool going forward,” read Wynne’s notes for the meeting prepared by her staff.

Under the current legislation, the city is not allowed to collect taxes on lodging and needs the province’s permission to do so.

On CBC’s Metro Morning on Thursday, Tory said a hotel tax would be “on the table” when a much-anticipated debate on revenue tools - taxes and fees the city does not currently employ - returns later this year.

Tory said the premier has not explicitly promised to help with the hotel tax.

But as Wynne’s staff prepared notes for the meeting, the premier’s chief of staff and principal secretary Andrew Bevan noted the premier and Tory had previously spoken on the hotel tax: “Why wouldn’t she say yes as the premier basically did last time?”

The premier’s briefing also says that while the Greater Toronto Hotel Association is asking for a ban on the tax, the province believes there is a “need for municipal leadership on selecting appropriate revenue tools.”

At Queen's Park, Municipal Affairs Minister Ted McMeekin said the call for a hotel tax has come only from the mayor.

“Mayor Tory has asked us to consider doing that. We’ve had no formal request from the City of Toronto at this stage,” McMeekin said Thursday.

“We’ve had a broad-based consultation with a number of municipalities and stakeholders and we’re considering all the information we’ve heard,” he said.

According to a budget briefing note from city staff released earlier this year, the city could raise between $7 million and $21 million annually from a tax on each room per night.

Currently, the GTHA collects money from the sale of rooms as part of a voluntary program - up to 3 per cent of what participating hotels make from room revenues - which is then given to Tourism Toronto.

The staff briefing notes say the hotel tax would either be in addition to the voluntary program or could replace it, but that the city “may be expected to restore and possibly augment” about $10 million in funding to Tourism Toronto that was cut when the program was first introduced, significantly lowering estimated revenues.

In a report last month, city manager Peter Wallace warned councillors that the city had a revenue problem, with billions of dollars in projects council has committed to without any funding sources. He promised to return with revenue tool options for debate.

Tory has not publicly said which taxes or fees he prefers, but has maintained the city’s property tax rate - the lowest in the region - should remain at or below inflation, as he promised during the election campaign.