Town of Newmarket exploring possibility of levying hotel tax

While the timing during the pandemic isn't right, the tax 'could be an opportunity to raise some revenues that could be used for economic development and support the local industry,' says the mayor

Newmarkettoday.ca
Feb. 4, 2021
Alan S Hale

The Town of Newmarket is exploring the idea of a new hotel and short-term accommodation tax -- though almost certainly not during the COVID-19 pandemic.

Accommodation taxes are common in many communities across Ontario since the provincial government gave municipalities the ability to levy them in 2017. The tax itself is added to guests' bills, and half of the money collected must go to local tourism marketing boards.

The subject of the tax came up at Monday's council meeting in a list of ongoing projects on which town are working. Mayor John Taylor said he has always been open to exploring an accommodation tax but that it's a non-starter to consider with the sector hit hard by the pandemic.

"If done properly and done with our neighbours' participation, this could be an opportunity to raise some revenues that could be used for economic development and support the local industry," said the mayor.

"But I would be very, very concerned about introducing a new tax on the hotel industry right now. Even speaking to them about it in the second quarter of the year is likely to fill our (email) inboxes."

NewmarketToday reached out to local guesthouse owner Patricia O'Hare, who agrees the timing is wrong to consider an accommodation tax. She and other hospitality businesses are struggling with the decline in guests resulting from lockdowns and travel restrictions, as well as increased costs related to safety measures such as additonal cleaning.

"It's not a good time. It's certainly not a good time to introduce something like this," said  O'Hare.

The then Liberal government gave municipalities the ability to charge accommodation taxes in the 2017-18 provincial budget in response to demands from the City of Toronto.

In York Region, both Vaughan and Markham charge a four per cent accommodation tax, although Markham's just came back into force on Jan. 1 after being suspended since April because of the pandemic. The two cities have different criteria of who must charge the tax.

In Markham, the accommodation tax applies to any stay that lasts 29 consecutive nights or less and is not at a hospital, long-term care home, university or similar locations.

In Vaughan, the rules explicitly identify stays at hotels, motels, bed and breakfasts, and even stays arranged through home-sharing apps. The money raised in Vaughan is used by that city to invest in tourism promotion.

How Newmarket structures its own accommodation tax will determine whether guesthouses like O'Hare's will have to charge it or not.

O'Hare worries that even a small surcharge on her guests' bills will upset the niche in the market she has found for her business, Patricia's Place. She caters to the lower end of the price range for accommodation in Newmarket and has kept her price per night at $60 despite the commission she must pay to hotel websites and the costs of sanitizing rooms during the pandemic.

"Guests already pay a lot of hidden taxes. When they go online, a stay will be advertised at a certain price, and then they will get into the booking, and there will be a service fee, which no one really knows what it's for ... then they have to pay HST. If you add yet another tax, I think it could be a bit of a deterrent," she said.

When asked if the prospect of the money being used to help the tourism industry made her any more favourable to the idea, she said any initiatives the town put in place would be unlikely to benefit operations like hers. 

With only three rooms, her low prices, accommodation websites and advertising had kept her full most of the time before she was effectively forced to close by the recent lockdown measures.

Newmarket's commissioner of corporate services, Esther Armchuck, clarified staff is only working on a plan for how to conduct consultations with industry stakeholders; they won't go ahead until council has a chance to review the plan and give the go-head. The report is expected to be ready by the second quarter of 2021.

Taylor said that this is an idea that should be approached slowly for the time being.

"Some of these businesses are under considerable stress, and even if we say this is an idea for the future, there needs to be sensitivity about the conditions they are facing."