New Tecumseth flirting with tax on short term rental market
Posted November 1, 2024
New Tecumseth's short term rental market - hotel, inns, Airbnb, etc - could be subject to a municipal accommodation tax (MAT) in 2025 if council accepts the proposal from its Economic Development office, as a new source of revenue.
Council will be presented with the various scenarios Monday night, with a first step to pursue engagement with short term rental market providers, the largest being the Nottawasaga Resort and its 269 rooms out of a total 425 across the municipality that would be subject to MAT, trying to convince them it can be a benefit to their operations as 50 per cent of the proceeds must be used on local tourism initiatives.
Under Ontario Regulation 435/17, municipalities can charge MAT for hotel, motel, B&B including Airbnb, VRBO and camp site stays. The charge only applies if an accommodation is rented for less than 30 days.
The sample used for council is four per cent, which could generate between $605k to $913K (after adminstration fees) based on 40 to 60 per cent occupancy rates.
Ontario has had MAT legislation since 2017, allowing municipalities to implement the taxes. In Simcoe County, Barrie has a six per cent MAT, while Midland is using a three year phase-in eventually reaching four per cent. As a component of MAT, a new set of licensing regulations targetting Airbnb and VRBO would be required as a means of "levelling the playing field."
"MAT helps ensure that all types of accommodations contribute to local tax revenues, creating a fair competitive environment between traditional hotels and short-term rentals," according to the report. "By supporting tourism and related sectors, MAT can stimulate local economies, creating jobs and opportunities for small businesses."
There's a realization the tax will not be popular.
" Accommodation providers, residents and visitors may view MAT as an unnecessary burden, leading to dissatisfaction or pushback against local government initiatives. This can be shifted by partnering with accommodation providers and the business community to enhance rather than detract business opportunities."
Click here for the report to council https://tinyurl.com/yhds79cw
