Victoria isn’t likely to take advantage of new regulations which allow it to use the hotel tax to pay for affordable housing, says Mayor Lisa Helps.
In Tuesday’s budget speech, the province said it will give local governments the “flexibility” to use hotel tax revenue to build housing in their communities.
“For our region, tourism is our second largest economic driver and it’s really important they have the resources they need to have to grow that very important sector of our economy,” Helps said.
She said the provincial budget “really took housing seriously” and “we need to make sure that we’re not scraping away from other industries.”
About $3 million a year is raised by the three per cent hotel tax, of which $200,000 is retained by the province for major events.
The provision that hotel tax money could be used for housing initiatives surprised Paul Nursey, CEO of Tourism Victoria. There has been a two per cent hotel tax, known as the Municipal Regional District Tax in Victoria since 1998.
In 2016, the city applied to have the tax increased to three per cent. The increase took effect Jan. 1 in a five-year deal.
Tourism Victoria became the eligible taxation entity, meaning the tax money flowed directly to it from the province. Tourism Victoria agreed to take over sales and marketing of the city’s Victoria Conference Centre. It also agreed to provide $1 million over 10 years toward building the David Foster Harbour Pathway.
“We believe that we’re locked in until 2021, although we don’t know because we haven’t seen how these regulations are going to change. We have a contract with the City of Victoria that was negotiated in good faith and we’re optimistic it will continue,” Nursey said.
Tuesday’s budget introduced a number of other initiatives dealing with hotel rentals and rentals of online accommodation such as Airbnb.
It will bring in legislation making rooms offered through online platforms subject to both the provincial sales tax and the hotel room tax.
The province estimates Airbnb will remit $16 million a year through provincial sales tax and $5 million a year through municipal and regional hotel taxes.
Helps called it “excellent” that online platforms such as Airbnb would be subject to the taxes.
The province also plans to give strata corporations the power to levy higher fines for owners using units as short term rentals, contrary to bylaws, if they choose to do so.