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Wellesley signs on to new region-wide hotel tax to fund tourism

The Township of Wellesley will be applying a four per cent municipal accommodation tax (MAT) to all hotels in the township. The tax, which was approved by councillors Tuesday evening, would be applied to revenues collected from rooms sold for overnight accommodations in the township.

The new tax is being implemented with the goal of raising funds for tourism marketing and advertising in the township and the Region of Waterloo.

Types of accommodations affected by the tax include traditional lodgings such as hotels and bed and breakfasts, but the tax will also be applied to short-term rentals like Airbnb (which collects and remits taxes automatically on behalf of those using the service).

Excluded from the tax are the likes of rentals for students, long-term care homes, and tents and trailers at campsites.

The MAT was initially introduced in 2017 by the province as an optional tax for municipalities to levy on hotels in their jurisdictions, with the aim of raising municipal funds for marketing and advertising.

The MAT is estimated to bring in $8,000 revenues, which will be split between three government organizations. The Township of Wellesley will keep 40 per cent of the tax moneys collected, while 50 per cent will be transferred to the Waterloo Region Tourism Marketing Corporation.

The remaining 10 per cent of the revenues will be shared with the Region of Waterloo, which prompted some questioning from Coun. Peter van der Maas.

“The distribution of money, I can understand 50 per cent going to the tourism and marketing board, because they will be advancing the industry within our area. And I can understand the 40 per cent going to the municipality because the hotels and services are being provided in the municipalities,” he said.

“What precisely is the region doing to earn its 10 per cent?”

In response, township chief administrative officer Rik Louwagie noted the Region of Waterloo was responsible for the upkeep of a number of tourist attractions in the region.

“A couple of examples I can give you: the [Ken Seiling Waterloo Region] Museum is one, and then also streetscaping on regional roads, it’s the sort of thing that can be done with that money. So it’s anything on regional properties that they can do to improve tourism attraction, and that’s what that 10 per cent should be used for,” said Louwagie.

Coun. Carl Smit noted the municipality already contributed to the region’s tourism board in a lump sum payment on a yearly basis.

“Are we going to pay the $5,000 to them anymore once this is in place?” he asked. Louwagie confirmed that the township would continue to pay into the tourism board through both its yearly contributions, as well as with the new MAT revenues generated.

“I don’t like that. I think we need to talk about that at budget time,” said Smit.

The net MAT revenues kept by the township will be put aside in a new reserve fund to pay for future projects. Potential uses for the revenues could include funding tourism, sports and cultural infrastructure, festival and event development, market research and tourism marketing.

Wellesley’s decision follows last week’s vote in Woolwich, where the additional tax passed quickly with little discussion by council. Home to more hotels, including new construction in St. Jacobs, Woolwich expects to generate much larger revenues from the accommodation tax: some $475,000.

The new tax comes into effect July 1, and is expected to generate $3.27 million across the region each year.

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