No room for this tax

Copyright 2002 CanWest Global Communications Corp.
Article date: December 16, 2002
 

Frank Klees, the new provincial tourism minister, is saying no to Ottawa's hotel industry's request for a room tax. Good for him.

Ottawa hotels have been lobbying for the room tax for some time, as have hotels in other parts of the province, including Toronto. The hoteliers are right to point out that many urban areas in North America have a charge added on to a customer's hotel bill, often much higher than the three or four per cent the Ottawa hoteliers want. They argue that without such a tax, Ottawa won't be able to compete with the hefty marketing budgets of other parts of the continent. A three-per-cent tax, they figure, would bring in about $6 million a year, which the city could use for "destination marketing" to convince travellers to come here.

The tax would be optional: the province would approve the idea, leaving the choice of whether to implement the tax up to municipalities. The City of Ottawa supports the idea -- although it would like to use part of the money for a new or updated Congress Centre, and the hoteliers want all of it to go to marketing.

The hoteliers argue that this would be a "self-imposed tax," since the businesses themselves would be the ones collecting it. But Mr. Klees counters that about 65 per cent of hotel guests in Ontario are Ontarians, so this levy would amount to a further tax on Ontarians. And that's something he's not prepared to advocate. That shouldn't come as a surprise. This Conservative government has been geared to reducing the number of taxes and regulatory burden in Ontario since taking office in 1995.

If the hoteliers really want a "self-imposed tax," why not go ahead and impose it themselves? No one is stopping hotels from agreeing to a common surcharge to pay for destination marketing. In fact, Mr. Klees says he would be willing to fight for matching funds from the province and the federal government, if the industry took the initiative on the room levy.

He agrees that extra destination marketing would be a good thing for the province, but points out that the province already puts about $38 million into tourism marketing every year, an expenditure that many people would argue should not be the obligation of taxpayers. If the private hotel industry wants to collect more money from its customers, it should do it by itself.
 

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