Backlog complicates tax extension

Nearly half of B.C. communities that collect the additional hotel room tax are expected to seek an extension this year

  • Jan. 5, 2012 2:00 p.m.

Penticton could be among an “unprecedented” number of applicants seeking an extension of the additional hotel room tax (AHRT) this year, according to an advocate for the provincial hotel industry.

B.C. Hotel Association CEO James Chase said that nearly 20 of the 40 communities in the province that collect AHRT to support tourism marketing are expected to come due this summer, after uncertainty around the HST caused a backlog of renewals.

“There’s a process to be undertaken to continue the tax or reintroduce the tax,” he said, adding it is established by cabinet through an order in council. “What will happen this year is unprecedented. Prior to the delays that were implemented because of the HST, every community used to have a different anniversary date. Everyone was on a different schedule.

“But now there’s close to 20 that their anniversary date … is June 30, 2012.”

The six biggest communities in B.C. generating more than $1 million in AHRT include Vancouver, Whistler, Victoria, Richmond, Kelowna and Kamloops. The first three have the AHRT grandfathered with similar anniversary dates.

Chase said they comprise 60 per cent of funds in the province, and of the middle group of large collectors, the South Okanagan features prominently.

“Penticton is significant. It’s a significant amount and generating what it should. There are not a lot of other communities of that size that are collecting that amount,” he said, citing Nanaimo and Campbell River.

The AHRT was first implemented in B.C. in 1986 to help communities generate tourism marketing funds, but was suspended in 1991. The concept was resurrected again in 1997, Chase said, on the promise of better accountability to hotel and motel operators.

“The hoteliers would be involved in the decisions, the procedures and the development of a business plan on how to use the tax moving forward,” he explained. “They are the collectors of those funds. It’s not their money, but they’re the collectors of the funds, and the way the program is designed, it’s an economic stimulus.

“The key measurement of that is putting heads in beds.”

The Penticton Hospitality Association has written the Ministry of Finance to indicate that 30 of 43 accommodation owners — or 69 per cent — are against the Penticton Business Development Group’s control of the AHRT funds because of the lack of small- to mid-size accommodator representation on its board. The tax requires 51 per cent of accommodators as well as those comprising a total of 51 per cent of rooms to sign on before it can be approved by cabinet.

Chase said he wouldn’t comment on the specifics of the PHA’s concerns, although communities across the province have different models. Many are choosing to move away from chambers of commerce to oversee tourism marketing, he added, and only one city — Kelowna — has changed the organization in charge of the funds.

“No community has ever, once the tax is implemented, not continued the tax to date,” he said.

He speculated that February could be a deadline for AHRT applications given the large number due to renew, but noted many might come later this year. The Ministry of Finance, when contacted Thursday, could not give an immediate answer to timelines.