Tory, Wynne discuss hotel tax

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Toronto Mayor John Tory has had discussions with Ontario Premier Kathleen Wynne about whether the province would give the city the power to implement a hotel tax, but the potential levy is just one of a long list of new revenue sources that city bureaucrats are studying to try to plug the annual budget gap.

Both the mayor's office and the Premier's office say no decision has been made on the idea, which has long been expected to be included on a menu of possible "revenue tools" for the city in a staff report going before City Council's executive committee later this month. The report is not expected to recommend any particular tax, leaving that controversial political decision to council.

The discussions on the possible hotel tax, and the Premier's apparent agreement that it could be allowed, were outlined in a report on Thursday in the Toronto Sun, which obtained briefing notes and e-mails under a provincial freedom-of-information request. The discussions were necessary as the city currently does not have the authority to implement such a tax under the City of Toronto Act, which the province is reviewing.

The tax is said to have been raised among many issues as part of a routine meeting between Mr. Tory and Ms. Wynne in February and at a meeting with Municipal Affairs Minister Ted McMeekin last November.

The 2006 City of Toronto Act, which granted Ontario's largest city special powers, already gives Toronto the authority to impose other taxes, such as levies on alcohol or cigarettes, many of which it has previously rejected as impractical.

The act also gave Toronto the power to bring in the land-transfer tax under mayor David Miller, which has provided windfall revenues thanks to the city's hot real estate market – a situation City Manager Peter Wallace has warned is financially untenable.

The city scrapped Mr. Miller's accompanying car-registration tax under mayor Rob Ford, but it still has a billboard tax.

Some at city hall have called for a tax on parking spots, which, unlike a hotel tax, is within the city's current power.

City finance officials are studying a range of fees, including a municipal sales tax, which would also require provincial legislative changes, or even a share of income taxes, which would need the okay of both federal and provincial governments.

City staff have previously estimated that a $1 per-room tax would yield $7-million a year for the city's operating budget. Many other cities, including Montreal, New York and Winnipeg, already have hotel taxes. And many Toronto hotels already pay into a voluntary marketing program, sending 3 per cent of their room revenues to Tourism Toronto to promote the city.

Mr. Tory, who is in Winnipeg for meetings with other mayors from across the country, told CBC Radio's Metro Morning on Thursday that the hotel tax is among the revenue tools on the table. But he said the Premier had not promised to hand Toronto the authority to impose it, nor had he "asked for anything specifically."

"We have discussed a number of ways in which the city can enhance its revenues," the mayor said.

Mr. Tory's office issued a statement saying that no decision had been made and that new taxes would need to be approved by City Council based on the upcoming staff report.

But the statement made it clear that the city needs new sources of revenue and that Mr. Tory had at least asked the province whether the new tax was possible: "We need to get on with building transit and infrastructure and to do that the city needs a sustainable source of funding. … As council moves to discuss how we pay for building transit and infrastructure, we felt it was important to understand if implementing a mandatory [hotel] fee was an option."

Mr. McMeekin, the province's municipal affairs minister, said no formal request has been made by Toronto but that Mayor Tory has asked the province to consider a hotel tax.  He would not commit to whether he would change any legislation.

"I believe Toronto is a mature level government that on a good day knows what they're doing so we listen very carefully to them," Mr. McMeekin said. "If they make a specific request or a series of requests we will give that full consideration. "

With a report from Jane Taber at Queen's Park