People renting a hotel room in Timmins will soon be paying a new tax.
Even though the municipal accommodation tax has been talked about for months, there was a last-minute attempt to postpone its implementation.
Tuesday, Timmins council approved a four-per-cent municipal accommodation tax.
It applies to hotels, motels, cottages and other short-term accommodations, including Air BnBs, within the city. It doesn’t apply to campsites and campgrounds, or university and college residences.
The bylaw passed means businesses start collecting May 1, with the governance model of how the money will be distributed being determined later.
Timmins Mayor George Pirie said the city will work with businesses to make sure they can get it done.
“The important thing is to get it passed and then begin the process of working with all of the partners to make sure it works correctly,” he said after the meeting.
A letter of concern from industry representatives was sent to the city yesterday afternoon.
In its presentation to council ahead of the 2019 municipal budget process, the Timmins Chamber of Commerce also asked council to cap the tax at four per cent, and include businesses paying into it in the oversight and distribution of it.
This week’s letter prompted Coun. Andrew Marks to ask to slow down the passing of the bylaw to make sure it's being introduced to the community correctly.
The last minute concerns, according to Pirie, were of a governance nature, such as who will sit on the committee and where the funds will go.
He noted it is legislated at least 50 per cent of it goes to tourism activities.
“It may be 100 per cent in some years, it depends exactly on the presentations that we receive before council that are going to want funding through the application of that tax. Make no mistake about it, the other 50 per cent can be used by the city as it sees fit, but the commitment that we have made is to advance tourism in the city,” he said.
CAO Dave Landers said the goal is to have the rough draft of the governance model together by the end of June, with approval in the early fall.
That structure will determine how the cash is spent.
“We’ll have presentations from Kamiskotia to Connaught and there’ll be ranking and ratings in place that reflects the application of those funds as it’s directly related to...increasing overnight accommodation,” explained Pirie.
The attempt to slow down the approval process surprised staff, who had previously been asked to get a program in place for Jan. 1.
Clerk Steph Palmateer said the Timmins bylaw is modelled after ones already approved in other Northern Ontario cities such as Sault Ste. Marie, Sudbury and Thunder Bay.
“I would be very surprised that the hotel chains don’t already have the systems that they require in place to accommodate...receiving and charging this tax,” said Palmateer, noting most of the hotel chains are already collecting these taxes in other communities.
During the meeting, Pirie also expressed his displeasure about the memo.
He said it was presumptuous to ask for a five-year strategic plan before they can agree to it.
“That isn’t going to happen, we have the right to put this tax in place, and quite frankly we are going to put this tax in place. And you have just lost, perhaps, and I will settle down, the biggest advocate you had for consultation, which was me,” Pirie said. “We have consulted, we have talked. To demand six months when in fact the first request was four months.”
In a September report about the program, it was estimated there are around 1,000 guest rooms at 16 providers (hotels, motels and cottages).
It is estimated the program could generate up to $1 million per year.
Across Ontario, Landers said there have been a variety of approaches to it.
“Some of them see a not-for-profit organization working directly for council to distribute those funds. Others are given a mandate on how council expects those funds to be treated in a strategic manner to fulfill the obligations and commitments of council in terms of what strategic tourism investments would be,” he said.
“We’re looking at both of those options to make sure that the model that we put before council gives council those options on how to make sure that those investments benefit tourism and benefit the hotel industry.”
Businesses will submit the collected hotel tax to the city monthly.
The money collected throughout the year will be spent the following year.
Because the cash is generated by tourism and people staying at hotels, Landers said it wouldn’t be prudent to project what the revenue will be and potentially overspend.
“So we’re really trailing a year behind from what our collection is to what our investment is,” said Landers.
You can read the full bylaw here.
