Recommend changes to the accommodation tax

Thunder Bay - Representatives of the Tourism Industry Association of Ontario (TIAO) attended the Rural Ontario Municipal Association (ROMA) conference this week to have the opportunity to speak directly with provincial government caucus members and ministry staff, and to recommend necessary improvements to the existing Municipal Accommodation Tax (MAT) regulations.

Ontario municipalities introduced the accommodation tax option in 2017.

The policy has been implemented in 50 of the province's 444 municipalities, often replacing fees collected under industry-led destination marketing programs.

TIAO President and CEO Andrew Siegwart said the first-generation regulations have produced some very good results.

"It has brought some significant investment to the tourism industry, including marketing, product development, investment, and promotion. It has also brought revenue to municipalities, enabling them to pay for and support some of the infrastructure and services that municipalities often invest in to support tourism," he said.

"Our recommendations come from the perspective that 'we have been implementing this for seven years and have learned many lessons.' We see opportunities to really improve collaboration, improve the way municipalities and industry consult with each other, so that we can make decisions faster and hopefully encourage more municipalities to overcome some of the barriers so they can implement the MAT and benefit from it."

Siegwart and his team made several recommendations to improve the accommodation tax. These include reducing red tape, increasing transparency in rate changes, and including college and university accommodations.

The recommendations also seek to ensure that short-term rental businesses, such as those found through airbnb.ca, participate in the tax - a decision currently left to the discretion of municipalities.

In 2018, Thunder Bay's accommodation tax was set at 4%.

In January 2024, city council voted to increase it to 5%. In 2023 alone, it raised over $3.7 million.

Paul Pepe, manager of Tourism Thunder Bay, said the tax is collected by the city, with 50% going to tourism and recreation programs and the other 50% allocated to the Community Economic Development Commission's Tourism Development Fund.

Most of the city's funding has gone toward the proposed indoor turf facility. Other attractions supported by the city include the cruise ship terminal, playground equipment at Centennial and Chippewa parks, the Centennial Conservatory, and the William Fort Gardens.

"We are able to support a wide variety of community tourism initiatives that help the city build a stronger tourism economy," Pepe said.

"Through the Tourism Development Fund, we reinvest those funds into destination development initiatives in the community, supporting business conferences, sports event attractions, cultural events, festivals with tourism value, and new experiences and attractions that help attract more visitors to the city and make them stay longer."

In 2024, the CEDC fund supported more than 68 different community projects, including the Central Canada Mining Expo, Wake the Giant, the India Festival, the Cineplex indoor skate park, and improvements to the Magnus Theatre.