Stratford council shoots down bed-and-breakfast exemption from tourism tax

Stratford council has shot down a proposal from a local proprietor to exempt small bed and breakfasts from collecting the city’s soon-to-be-enacted municipal accommodation tax.

Speaking at Monday’s council meeting, Laura Pogson, owner of the Newhaven on the River guest house on William Street, asked councilors to consider exempting small B&Bs with four bedrooms or less from collecting the four per cent tax from overnight guests.

“A B&B is first and foremost a private residence occupied and operated by the property owner and, as such, is classified in the residential property tax class. … The city’s licensing bylaw mandates the owner to live on site as their primary residence and, as such, has privacy protection. The Ontario legislation (regulating municipal accommodation taxes) recognizes this fact and has thus incorporated the option for the municipality to exempt these private residences offering four or less rooms. … Niagara-on-the-Lake has exempted B&Bs with less than five rooms and that jurisdiction is our closest significant (tourism) competitor,” Pogson said.

“Many of my guests … will surely question tax exemption in Niagara if Stratford should insist on its payment. … I have been dismayed when colleagues have been overwhelmed by bureaucracy at the point of selling or closing. Is there an interest in once again developing and promoting small-sized accommodations that were the foundation of hospitality when the (Festival) Theater opened in 1953?”

After council approved a few minor housekeeping amendments to the city’s municipal accommodation tax by law following Pogson’s delegation, Coun. Cody Sebben introduced a motion to further amend the bylaw based on the B&B owner’s recommendation.

Wondering whether that exemption would also apply to those who rent out entire residential dwellings as short-term accommodations similar to those popularized on websites like Airbnb and Vrbo, Coun. Jo-Dee Burbach made a referral motion to have city staff bring back a report with more information on how the exemption would be worded.

That motion, however, was defeated, leaving council to vote on the original question, which Sebben amended slightly to specify the exemption would only apply to actual B&Bs with four rooms or less.

“We’ve had many discussions about this. I don’t believe that giving anyone an exemption to this (tax) is a fair way to approach this,” Coun. Larry McCabe said before the vote. “The reality is we need money to market our destination, and this is what is being used in every destination that is credible in the world. … As a person who has been in the hospitality and tourism industry for all of my life, I kind of feel that the tourism industry acts irresponsibly, and it’s a responsibility to the rest of the community to participate in funding itself.

“I also believe this funding is strongly needed to start marketing this destination as a four-season tourism destination in order to be competitive in a market where we do not have a workforce. If we continue to just be a marginal, summertime destination, we’re going to have a very difficult time, so the (municipal accommodation tax) is very important for that.”

Ultimately, the majority of council voted against Pogson’s suggestion, with just two councilors – Sebben and Burbach – voting in favor of an exemption.

Stratford council passed a bylaw last summer approving the implementation of a mandatory municipal accommodation tax on overnight guests staying at any local short-term accommodations for less than 30 days continuous. Scheduled to come into effect on July 1, the tax is meant to supplement city tourism investments through revenues raised from visitors. While not intended to fully replace municipal tourism investments, the tax provides additional money for services that benefit both visitors and residents while offering a stabilized base funding for tourism.

In Stratford, tax revenue will be collected from local accommodation providers by the Ontario Restaurant Hotel and Motel Association and will be shared equally between Destination Stratford and the city.

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