Hotel tourism levies in New Brunswick 'voluntary' tax, MLAs told

A senior government official surprised MLAs Friday when she told them the tourism levy charged by some hotels in New Brunswick is voluntary.

Kelly Cain, who was acting deputy minister of tourism, culture and heritage until last month, told the legislature's public accounts committee that no one is required by law to pay the levy, which she said is actually a tax.

"It's voluntary ... The guest is under no obligation to pay it if they refuse to," Cain said.

Hotels in Saint John, Miramichi, Bathurst, Charlotte County and the Madawaska area charge different types of tourism levies, which help fund local tourism marketing efforts.

No need to pay

But Cain said because there's no legislation in place, guests can ask to have the charge removed from their bills.

That surprised Progressive Conservative MLA Ross Wetmore, the opposition critic for tourism.

"You certainly gave me new information because I didn't realize it was a voluntary tax," Wetmore said. "And I would probably say that 99 per cent of the people who pay their hotel bill do not realize it's a voluntary tax."

The issue came up after Wetmore raised the idea of provincial legislation to set up a New Brunswick-wide tourism levy. The Tourism Industry Association of New Brunswick estimates it would have collected $6 million last year that could have been spent on marketing.

PC election promise

TIANB wants a legislated levy and the PCs promised one in the last election campaign, which they lost. The Liberal government decided this year to not establish one.

That leaves the local, voluntary levies in place in some areas — money that New Brunswickers now know they don't have to pay.

It's a practice, and if you so choose, you can ask to have it waived.- Kelly Cain, former acting deputy minister of tourism

"No one's trying to be misleading in the province," Cain said. "It's a practice, and if you so choose, you can ask to have it waived."

Wetmore responded: "I'm sure they're not being misleading intentionally. But I don't think every time you go up and you pay your bill that the front desk says, `Listen if you don't want to pay that three per cent,' or whatever it may be, `you don't have to pay it.'"

Levies started 6 years ago

Saint John was the first to bring in a levy six years ago, with hotels topping up room bills by three per cent. The money helps fund promotional efforts by Destination Saint John.

Cain said the Charlotte County Tourism Association, the Miramichi Tourism Association, a hotel group in Bathurst, and a tourism office in the Madawaska area have since added levies.

She called the debate over a single provincial levy "a really odd subject" because some tourism operators and groups "want the government to legislate something but they don't want to lose anything. They don't want to lose control" over how the money is spent.

She also said the levies are "by legal definition a tax. And it has been a tax. We don't call it that, but that's what it is."

'A tax to a tax'

But because it's not written in law, the harmonized sales tax, increased by the Gallant Liberals to 15 per cent this year, would have been applied on top of it — "a tax to a tax," she said.

That was one reason the Liberals decided not to do it. "It was the government's sense that it would be a heavy tax structure," she said.

Wetmore told reporters after the hearing the PC party still supports the creation of a fund.

He wouldn't say whether hotels that collect a levy should disclose to customers that they can opt out.

"I certainly can't tell hotel operators how to run their business, and I'm not going to," he said.

Wetmore also wouldn't say whether he'll ask for it to be taken off his bills. "Good question," he said.