City Council to debate new tax on hotel, motel rooms

Sault Ste. Marie City Council will be asked Monday to approve a mandatory four per cent accommodation tax on motel and hotel guests who stay 29 consecutive nights or less.

"Many other municipalities have implemented the new tax or are in the process of implementing this levy," Al Horsman, the city's chief administrative office, says in a memorandum recommending the new municipal tax.

The new levy is expected to cover all short-term accommodations including rooms offered through online services like Airbnb.ca

Algoma University and Sault College residences would be exempt.

The four per cent compulsory tax would replace a three per cent voluntary destination marketing fee (DMF) currently charged by 84 per cent of Sault Ste. Marie's hotels.

Participating hotels currently raise about $760,000 a year in DMF charges.

The money is given to Tourism Sault Ste. Marie (a division of Sault Ste. Marie Economic Development Corp.) which has used the cash to attract events such as the Poker Run, WTF Festival and the World Under-17 Hockey Challenge.

There's currently $1.3 million in a DMF reserve account controlled by participating local hotels.

That money can be spent on tourism initiative, using criteria set out in an agreement with Tourism Sault Ste. Marie and the EDC.

City councillors in Sudbury and Thunder Bay have already approved a four per cent tax on short-term accommodations.

Sudbury's tax will take effect Sept. 1.

Officials in North Bay and Timmins are currently mulling the idea and are expected to recommend a four per cent tax to their respective councils.

In Sault Ste, Marie, Horsman estimates the new mandatory tax could raise up to $1.25 million annually.

The province requires that $760,000 of that would continue to go to Tourism Sault Ste. Marie.

The $475,000 remaining after administration costs could be used for other activities aimed at tourism promotion.

Horsman says recent discussions with industry stakeholders indicated that the hospitality sector should have significant input into how local tourism-promotion funds are spent.

Monday's City Council will be livestreamed on SooToday starting at 4:30 p.m.