Toronto eyeing temporary increase in hotel tax to offset FIFA costs

Toronto is considering a temporary two and a half per cent increase to the city's hotel tax as a way to offset how much it would have to pay to co-host the FIFA World Cup in 2026, according to a proposal released Monday.

The proposal says the Municipal Accommodation Tax paid by guests staying at hotels and short term rentals could increase from six per cent to 8.5 per cent starting June 2025 up until July 2026, ending after the games.

Speaking with reporters on Monday, Toronto Mayor Olivia Chow said that with large crowds expected at events like Taylor Swift's concerts in November and the upcoming World Cup, hotels could also pay their share.

"The hotels are doing quite well, all the rooms are booked. As you can imagine, they will do very well with the World Cup and we're asking them to support us," she said. 

The tax increase is projected to generate $56.6 million to cover the costs of FIFA. It will be up for consideration by the city's FIFA Subcommittee on Nov. 4 and later come to city council for a vote.

Hosting 6 matches set to cost $380M

Toronto and Vancouver will be hosting the 2026 FIFA world cup games in Canada, alongside the United States and Mexico. Six matches will make up Toronto's portion of the event. 

Hosting the games is estimated to cost $380 million, a price tag that ballooned since the city first pitched hosting the games in 2018. Back then, a city report estimated the cost at between $30 million and $45 million. 

With federal and provincial funding covering the majority of the expenses, the city is responsible for 47 per cent of total costs. According to the recent proposal, while the city found existing sources of revenue to cover some of them, it still needs to find ways to offset $95.1 million without property taxpayers bearing the impact. 

Coun. Brad Bradford told CBC Toronto the tax increase will be a blanket cost added to businesses even if they're nowhere near the FIFA venue downtown at BMO Field.

"If you're a hotel operator out in Etobicoke, the mayor's decision here, immediately makes you less competitive," he said.

According to a city report from February, the games are expected to give Toronto an economic boost of roughly $392 million in GDP, along with a $456 million boost for Ontario. The report also says holding the games is expected to create about 3,500 local jobs. 

Bradford said that with annual deficits the city faces every year, he believes that once the hotel tax is imposed, it may never go away.

"It's unlikely that this ever comes off the books. I think those in the hotel sector and visitor economy are rightly concerned," he said. 

If the hotel tax is increased, this would be the second time it's been hiked since 2022. Last year, the rate jumped from four to six per cent.