A new four per cent tax on hotel rooms in Greater Sudbury could be implemented in September, if the recommendation is approved by the city's finance committee next week.
Approved in principle in February, the new tax on the city's 2,000 hotel rooms is expected to bring in $1.7 million in 2019, half of which will be used to finance tourism initiatives, with the other half helping to pay the mortgage on the $100 million arena planned for the Kingsway. The tax should raise about $425,000 for the balance of 2018.
The province approved legislation in 2017 giving cities the right to bring in the tax, and Sudbury would be the third community to do so, following Toronto and Ottawa's lead. Another eight municipalities are in the process of implementing the tax.
“It is proposed that the MAT will apply to accommodations which are provided for consideration where a bed is provided, whether or not there are additional amenities or services,” the report said.
“Examples would include hotels, motels, motor hotels, lodges, resorts, bed and breakfast establishments, and all or part of a dwelling unit, such as occurs with Airbnb. The MAT will be applied to the fees and charges for the accommodation only.
“It is proposed that charges for ancillary services such as food, beverages, entertainment, internet usage, telephone usage and similar charges will not be subject to MAT provided these charges are separately itemized on the invoice.”
The money earmarked for tourism will be handled by the Greater Sudbury Community Development Corp. It could be used to support local festivals, sporting tournaments, advertising or even bidding to host major sporting events.
The total mortgage for the $100-million arena is $5.2 million a year for 30 years. In addition to the hotel tax, the city will use the $1 million it had been paying to support the Northern Ontario School of Architecture that was coming off the books anyway.
A report headed to finance committee June 19 said local hotel owners have a few concerns about the municipal accommodation tax (MAT), as it's formally known.
Those concerns include the impact on already tight profit margins, competing for customers with cities that don't impose the tax, and the fact some hotels have long-term agreements with companies to provide rooms at a guaranteed rate.
“The providers are obligated to honour these rates,” the report said. “Therefore their ability to generate revenue from corporate contracts may be negatively impacted by the MAT.”