On Wednesday Prince Edward County Council hosted a Special Committee of the Whole Meeting. The purpose of the meeting was to discuss a proposed Municipal Accommodation Tax (MAT). It’s expected a bylaw concerning the institution of a MAT tax on accommodation providers in Prince Edward County will be forwarded for deliberations at the Council meeting on Tuesday, March 24.
The proposed four per cent levy has been in the works since late 2018 when council received a report directing staff to develop a proposal for the introduction of a MAT.
Since December 2017 when the provincial government passed the Transient Accommodations Tax Legislation, municipalities across Ontario have been implementing a MAT. So far, close to 30 municipalities across Ontario have implemented this tax. Of those municipalities, four per cent is the common amount levied, according to Todd Davis, Acting Director of Community Development and Strategic Initiatives.
“A MAT is a common revenue generating tool used around the world to support tourism development and promotion. It’s generally collected through a percentage on transient accommodation,” stated Davis. “In Ontario, industry assumptions through the Tourism Industry Association of Ontario (TIAO) assume most Ontario communities will be charging a MAT in the next few years.”
Those affected would include hotels, motels, motor hotels, bed & breakfasts, or other establishments providing lodging (eg. STAs).
Exemptions include crown and every agency of the crown, such as Sandbanks Provincial Park. As Davis noted, other exemptions include educational facilities, universities/colleges, school boards, hospitals, long-term care treatment facilities, shelters, houses of refuge, emergency shelters and hospices, and employee housing. He added that, to date, most municipalities in Ontario have exempted tent or trailer sites.
“Other exemptions include group bookings or any booking that is made and paid for prior to the implementation of the tax,” he stated.
According to Davis, a conservative estimate of annual revenue generated from a MAT is approximately $836,000.
Provincial legislation dictates that 50 per cent of this must be used towards infrastructure services (e.g. Affordable housing, road repairs etc.). The remaining 50 per cent must be used towards destination promotion and development.
Municipal Staff is recommending a phased approach to implementing MAT. Phase one would consist of implementing and collecting MAT. Phase two would involve allocation of MAT funds.
As per the staff report, once phase one is underway, staff will begin both industry and public consultation to determine the best use of MAT funds. The report further suggests that while phase two takes place, MAT funds (with the exception of staffing and overhead expenses) be placed in reserve funds until the desired allocation has been determined.
In his presentation to council, Davis indicated the recommended start date of June 1st, 2020.
“Knowing in advance, that for most summer accommodations in Prince Edward County during high season, those accommodations would be booked and paid for prior to a June 1st date there would be a much more limited amount of money collected in this calendar year. But, that would set us up nicely to have a full MAT season in 2021,” Davis explained.
Within the accomodation/host sector in Prince Edward County, there has been much ire provoked by the proposed implementation of June 1st . Davis noted his department has received a number of communications expressing concern with the impending implementation date.
Several accommodation owners have suggested an implementation date of January 1st, 2021.
However, Davis emphasized that the earliest possible implementation date was proposed for good reason. Doing so enables the County to not only begin collecting the modest tax, but to address any challenges that will invariably arise.
“The later we push the implementation back will have greater impacts on the following tax season,” stressed Davis. “If we waited until January 1st, 2021, any booking made or paid for prior to that date would not be eligible for the tax, meaning we wouldn’t see the full benefit of this tax until 2022.”
Speaking in opposition to the June 1st, 2020 implementation was Wellington Times Columnist Rick Conroy. Conroy, who operates an STA, believes the speedy implementation of such a tax would unduly burden STA operators.
“The folks being asked to carry the water for this brand new tax don’t know it’s coming, present company excluded. Moreover, most don’t know that you plan to impose it upon them in 90 days,” said Conroy. “The communication and rollout of this new tax regime has been poor.”
Conroy cited recent budget deliberations, wherein CAO Marcia Wallace asserted “big changes” were coming but that stakeholders would be consulted. Conroy inferred that such consultation has not, thus far, occurred.
“On the very first big change out of the gate, there’s scarcely been any consultation with the folks who will be directly affected. Do these folks not matter?” he asked.
Conroy added that had staff consulted with accommodation operators, they would have learned there is broad-based support for such a tax, but that a June 1st implementation is simply too soon.
“This is a partnership. Partnerships require trust and accountability. You’re asking these small businesses to enter into an arrangement, in which you will share a stream of their revenue but will sort out somewhere down the road how that money is to be spent. You wouldn’t do it in your own business and it’s disrespectful to ask these folks,” chimed Conroy.
Conroy, who is Chair of the Community and Economic Development Commission (CEDC), argued that commission was entirely by-passed in the development of the MAT and should have been involved from the beginning.
“I’m urging you to pull back from the brink. Let the CEDC do its job. Hear from your partners. Give them ample time to prepare. Set a new target for January 1st,” he stated.
Councillor Janice Maynard took issue with Conroy’s assertion he, along with others, had not heard of the impending MAT tax or that it was not widely available information.
“Rick, I know you’ve been following this discussion over the past three plus years, so you’re saying that you have not heard or reported on the fact that when we started down the road of instituting STA Regulations, the impetus to that was a desire by council to derive some revenue to offset the expenses that are incurred by the municipality,” she stated.
“This has been an ongoing conversation for over three years now and I’m sure the MAT has been mentioned numerous times and was incorporated into the consultation with the STA Regulations. It seems somewhat disingenuous that people are not aware that this was going to happen,” she added.
In defence, Conroy asserted that although he has been aware of the MAT, many aren’t.
Mayor Steve Ferguson asked for clarification as to whether or not the tax itself was opposed and confirmed Maynard’s statements regarding previous discussions about the tax.
Again, Conroy iterated that he does not believe there to be widespread opposition to the proposed tax.
“I must concur with Councillor Maynard in suggesting that conversation about the introduction of the MAT in 2020 has been very widespread,” added Ferguson.
Councillor Ernie Margetson also commented that he was not convinced of Conroy’s argument that consultation was not attempted. Margetson pointed out that consultation is planned as phase two of the proposed MAT implementation.
“Within phase two, we are going to have consultation. We have that set up within the next six months,” said Margetson.
Judy Plomer also spoke to council. She has operated a cottage rental property for 19 years in South Marysburgh.
“I’ve worked very hard to build this business on my own with no help from anyone. I’ve got a loyal base of customers that come back to me year after year,” she said.
For Plomer, the MAT came as a complete surprise. Currently, she is struggling with the idea of asking her customers for more money.
“I’m very concerned. I find it incredibly unprofessional for me to have to go back to my customers and ask them for a tax after 19 years in business…I just find the whole thing crazy,” she said. “Quite honestly, the county has never helped me with my business in all these years. I’m there building my business, working very hard to bring people here who spend a lot of money in the county and now you’re asking me to ask these people for a four per cent tax.”
Like Conroy, Plomer urged council to consider delaying MAT implementation until January 1st, 2021.
“I feel this is a real slap in the face for people like me who’ve worked so hard and tried to do so much for Prince Edward County. I feel like an ambassador to this county…I cannot go back and ask those people for more money. They’re wonderful people; they love the county and I feel I’m going to have to take the hit for the four per cent tax,” she added.
Plomer further added that she is especially disinclined to collect the MAT until it is clear where the money will be spent.
Councillor Janice Maynard reiterated that, as per Davis’ presentation and report, half the money collected from the MAT will go towards marketing and destination promotion while the other half will go towards infrastructure.
“You heard in the presentation from staff that half the money goes toward marketing and the other half goes to infrastructure,” said Maynard. “Those are pretty straightforward things to let people know-we’ll be using it to help mitigate the damage to our infrastructure and to help promote the industry.”
In his concluding comments, Mayor Ferguson spoke about the need for a MAT tax and commended staff on their report.
“I think we understand that any kind of tax is unpopular, but the concept of a MAT is not new. This is something, as we heard, was started in 2017. We started talking in council in 2018. It’s been an ongoing conversation amongst council members and with the public,” said Ferguson. “I view it as the appropriate thing to do, as something that is applied only to our visitors and people using our tourism accommodations. Yes, there will be some administrative issues that the accommodators will have to attend to. Whether this was applied on June 1st or October 1st, many of those challenges would remain. I support staff’s recommendation that this be implemented for the June 1st date.”
Council voted to accept the report and recommendations put forth by council. As Davis stated in his presentation, the next step will be a by-law coming forward to council on March 24th.