City council listens in as Travel Penticton representatives Barbara Haynes (left) and Thom Tischik present on concerns from the tourism industry regarding proposed changes to the hotel room tax. Dustin Godfrey/Western News

Penticton council to call for clarity on hotel room tax changes

Changes would allow local governments to use the tax for affordable housing initiatives

The City of Penticton is joining a letter-writing campaign on proposed changes to the hotel room tax at the urging of the local tourism association.

The tourism industry association — along with others in B.C. — is crying foul after the provincial government announced it would expand the scope of the municipal and regional district tax (MRDT).

Last year the city entered a five-year agreement with the newly formed Travel Penticton to take control of the MRDT, a two per cent tax on hotel rooms, and associated spending.

The tax, often referred to as the hotel room or hospitality tax, has traditionally only been available for use in external advertising for tourism. However, the B.C. government announced plans in its budget to open up that coffer to allow funds to go toward affordable housing.

The provincial government also announced that it would be working with Airbnb to collect provincial sales tax and MRDT through the online service.

“Nobody ever really heard — and we still haven’t — how that would work, or what that would look like,” Barbara Haynes with Travel Penticton said in a committee of the whole meeting in city council Tuesday. “Would it actually come back to the municipality, or are those the dollars that would have opportunity to address affordable housing? We don’t know that.”

According to the B.C. government’s 30-point housing plan, the extra money from the MRDT and PST on Airbnb rentals “will help the Province and local governments ease housing affordability. Local governments will also have access to the MRDT revenues.”

The plan further states the MRDT spending allowance expansion will allow more options for communities struggling with housing hospitality or tourism workers, and the tax will “give local governments more flexibility” to fund housing initiatives.

But Haynes took issue with the wording in the legislation, which was sent to Travel Penticton in a bulletin last month, and took exception to the lack of consultation on the change in the tax.

“The bulletin simply said that it was the MRDT legislation, and in that legislation it simply added the phrase ‘MRDT funds can be used for external marketing, promotions and programs and affordable housing,’” Haynes said.

That bulletin, Haynes said, caused an uproar among tourism businesses and associations. It sparked a letter-writing campaign with more than 1,300 letters to the provincial government to sit down with the province for clarity of how the changes will come to pass.

Haynes added “nobody knows” what kind of housing the MRDT could go toward, whether it would be seniors’ housing, housing for homeless or housing specifically for tourism industry.

Coun. Judy Sentes, who said she was “offended” by the move from the province, noted any money redirected from the tax would be “a drop in the bucket” for housing initiatives, while it would have a more major effect on tourism advertising.

However, as pointed out by Mayor Andrew Jakubeit, the city has a five-year agreement, which specifically states the tax will go toward external marketing, negating the concern locally at least until the MRDT is renewed.

Coun. Helena Konanz, calling the lack of information available “disrespectful” to municipalities, said she was supporting a letter that would call on the provincial government for more clarity on the MRDT tax changes.

Councillors Campbell Watt, Tarik Sayeed and Konanz all appeared to agree that they did not want to bind future councils who may want to make use of the expanded scope of MRDT. However, Jakubeit, Sentes and Coun. Max Picton all noted they were in favour of earmarking that tax for external tourism marketing.

Council voted unanimously to write a letter to the province alongside the campaign to call for more clarity, without taking a position on the expanded scope.

“If it progresses further and we need to take a formal stand, we can cross that bridge when we come to it,” Jakubeit said.

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Dustin Godfrey | Reporter

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