B.C. approves 2.5% Vancouver accommodation tax to help city pay to host FIFA World Cup

Starting Feb. 1, booking a room in a Vancouver hotel, Airbnb or vacation rental by owner (VRBO) will come with an additional 2.5 per cent tax as the city seeks to raise revenue to host the 2026 FIFA World Cup.

To help offset hosting costs,  the B.C. government and Destination Vancouver have agreed to the temporary tax rate on sales of short-term accommodation for the next seven years.

Revenues from the temporary tax hike — known as the Major Events Municipal Regional District Tax —  will be used to finance planning, staging and hosting the soccer tournament. 

The City of Vancouver asked the provincial government for the tax hike last fall, saying the city would have to run at "above and beyond normal operating city service levels" for the World Cup.

Revenues from the major events tax will go toward offsetting the costs of staff, security, venues, resourcing and training sites. 

Vancouver and Toronto are among 16 North American host cities and will hold 10 of the event's 70 matches.

The B.C. government previously imposed a major events tax to fund the Vancouver Olympics in 2010.

Communities can also seek the approval of the ministers of tourism and finance for such a tax through Destination B.C.

It can be applied on top of an existing accommodation tax already in place in more than 60 regions in the province that finance tourism marketing, programs and projects. 

"I think it's fairly reasonable," said Vancouver Coun. Pete Fry. "It's a modest fee attached to hotel and short-term rental stays that'll help offset some of the cost demands we will have with an event like FIFA."

Fry tells CBC that raising revenue through tourism will spare Vancouver residents the significant costs of hosting such a high-level event.

Hotel and tourism sector on board, says minister

B.C.'s finance minister, Katrine Conroy, says the rate was determined in consultation with Vancouver's hotel and tourism sector.

"They all agreed after much discussion that there will be hundreds of thousands of people coming into the city, so it will bolster tourism and help them."

The B.C. Hotel Association was not available for comment.

Peter Milobar, the B.C. Liberal MLA for Kamloops-North Thompson and opposition finance critic with a background in the hotel industry says he can imagine the sector agreeing to the rate but says he has concerns about the timeline.

"They want to make sure that it's not just an unlimited pot of money that keeps getting added to in terms of cost, cost pressures, or length of time with taxes in place."

Conroy says representatives from the hotel sector initially had concerns with the time frame. The province estimates the tax will generate approximately $230 million.

"There was an agreement that this would be applied over seven years, and there's also an agreement that if that amount of money is incurred prior to the seven years, the tax will end."

"Inflation has gone up, so we feel estimates might be a little higher, but we'll see," said Conroy. "We know the costs could increase with more detailed planning."