Toronto's executive committee votes for 4% hotel tax

Toronto welcomed a record number of tourists in 2017, but if those people come for a second visit they may have to pay more for their hotel or Airbnb.

Mayor John Tory's executive committee approved a four per cent tax on both hotels and short-term accommodations — like those listed on Airbnb and similar sites. The city expects to bring in some $16 million from the new levy.

• Toronto welcomed a record 43 million visitors in 2017

Initially, councillors and city staff were considering a higher rate of 10 per cent for short-term rentals, but that appears to have changed in recent months. Tory calls the changes "fair and consistent."

"I think the most unfair situation was the one that existed before where there was no regulation on the Airbnb-type operators, there were no taxes charged, and now I think we have fair taxes," he told reporters.

A new Tourism Toronto report says a record 43 million people visited the city last year, spending more than $8.8 billion. An estimated two-thirds of those people came from elsewhere in Canada.

Tory calls those numbers "spectacular."

Airbnb to collect and remit fees

The biggest question raised at the committee was who should be in charge of gathering the tax. 

City staff recommend entering into an agreement with the Greater Toronto Hotel Association and the various short-term rental companies to collect the funds. 

Coun. Janet Davis says she's "not convinced" that the city's not taking a risk by not collecting the tax itself. Coun. Frank Di Giorgio also voiced concerns that the city lacks a consistent method to gather the money.

Coun. Michael Thompson moved a motion asking staff to look at other ways to collect the tax that was approved. Councillors will get that information before they take a final vote.

Alex Dagg, Airbnb Canada's public policy manager, says her company is committing to collecting and remitting the money and will build it into the platform, making it more likely the city will get "every single dollar."

City officials said they're confident it will be able to collect the vast majority of the money.

Several Airbnb hosts who spoke about the proposed tax said they felt its fair. 

The hotel industry had argued against the tax in the past, noting operators already pay commercial taxes and deal with a number of regulatory issues. 

As part of the changes, hotels will no longer be required to pay a destination marketing fee to Tourism Toronto.