MISSISSAUGA CONSIDERS HOTEL TAX: TESTING THE WATERS

NRU
July 5, 2017
Sarah Niedoba

Mississauga is testing out its new ability to implement a hotel tax with the intent of bringing additional revenue to the cash-strapped city.

Staff told councillors at last week’s budget committee meeting about the potential benefit of introducing a 5 per cent hotel tax—annual revenue of $16-million.

“Council and staff will need to review this new revenue tool closely. We will need to understand the expected revenue it will generate, what it will mean for the competitiveness of local businesses and how we could best allocate this new funding to invest in the public services businesses and people rely on each day,” Mississauga mayor Bonnie Crombie told NRU.

In April, the province announced that municipalities would soon be able to apply a sales tax to their hotels. Changes to the Municipal Act give municipalities the authority to levy their own taxes on transient accommodation, in addition to the existing 13 per cent HST that is currently applied to every hotel room in the province. To make use of these new powers, municipalities are awaiting enactment of provincial regulations.

Currently, Toronto and Mississauga hotels choose whether to pay a voluntary 3 per cent destination marketing fee, which generates between $20- and $30-million annually. The revenue is used by Tourism Toronto to provide marketing for both Toronto and Mississauga, although only a very few hotels in Mississauga participate in the program.

At the budget meeting, staff detailed how destination marketing funds are used only to advertise hotels which participate in the program. With so few of Mississauga’s hotels participating, Tourism Toronto has a limited amount of funds with which to promote the city.

“I think that, if we were to implement a hotels tax, a good portion of that revenue could be put towards creating a tourism bureau for the city,” Mississauga Board of Trade president and CEO David Wojcik told NRU. “I think that considering that we’re the sixth largest city in Canada, and the third largest in the province, we have the critical mass to support our own bureau.”

Wojcik says that he hopes that any eventual tax would go towards building the city’s tourism efforts, instead of the funds being folded into the city’s general revenues. “There are certain things we really do need—a proper convention centre, an Olympicsized pool. Provided the funds were being put back into attracting visitors to the city, I think it could become a palatable tax to swallow for the city’s hotels.”

Staff will report back to the budget committee once the provincial regulations have been enacted later this year.