Ford government ending popular staycation tax credit

Thestar.com
Dec. 15, 2022

Ontario’s popular staycation tax credit won’t be renewed in 2023, the province’s tourism minister says.

Despite calls from tourist organizations and opposition critics to make it permanent -- saying it will continue to encourage Ontarians to travel within the province -- Neil Lumsden said it was a one-year measure to help operators rebuild after tough times because of COVID-19.

“In 2021, our government introduced the temporary Ontario staycation tax credit for the 2022 tax year to help Ontario’s tourism, hospitality and culture sectors recover from the pandemic which required limits on travel and other restrictions,” he said in a statement to the Star.

“While the staycation tax credit won’t be reintroduced for the 2023 tax year, tourism activity in Ontario has recently reached its highest level since the onset of the pandemic. We are supporting the sector in 2022-23 through several programs and initiatives, including investing $48.1 million for festivals and events and $19.1 million in support for regional tourism organizations.”

He said “our tourism sector is an economic powerhouse, and we will continue to work to ensure this valuable sector continues to thrive as we look ahead to 2023.”

The tax credit allows Ontarians to claim 20 per cent of expenses for vacation accommodations such as hotels, cottages or campgrounds when filing income taxes -- with individuals eligible to receive up to $200 and families $400.

The province has allocated $270 million and expected 1.85 million families to claim it.

Daniel Safayeni, vice-president of policy for the Ontario Chamber of Commerce, had called for the tax credit to be permanent. However, he said, “we recognize this was a temporary measure to support tourism operators through the pandemic. While disappointed it will not continue, we hope to work with the government on similar initiatives to support the industry’s rebound and growth.”

Christopher Bloore, president and CEO of the Tourism Industry Association of Ontario, said the staycation tax credit “was not only an economic incentive for Ontarians to travel, but served as an important communication tool that helped to rebuild confidence in travelling after lockdown” and that “maximizing domestic travel within Ontario has played an integral part of the work to mitigate the devastating impact of the COVID-19 pandemic on the tourism industry.”

Bloore, however, said the association “looks forward to working with the provincial government to ensure that we build on that momentum and create the new strategies to grow the Ontario tourism industry.”

A recent report by the chamber and association on the state of the struggling sector called for a number of measures to help return tourism to normal levels, which they don’t expect to happen until at least 2025 or even beyond given current inflation and cost-of-living increases.

Overall, tourism activity has declined about 35 per cent from pre-pandemic levels. Tourism operators are, on average, making just 64 per cent of revenues before 2020.

The report urged all levels of government to help with a strategy including addressing workforce shortages, easing taxes on booze and accommodation and improving transportation and broadband access.

Wayne Gates, the New Democrat MPP for Niagara Falls, said “to help Ontario tourism get back on track, the Ford government should extend the staycation tax credit.”

Gates said he had originally pushed for a “travel Ontario” tax credit that would have included purchases at restaurants, hotels, outfitters and tourist attractions.