Ontario hospitality industry wants 'staycation' tax credit reinstated in light of U.S. tariffs
In letter to premier, industry association says credit would encourage local travel, soften economic blow
As U.S. tariffs have many Canadians rethinking travel plans south of the border, Ontario's hospitality sector is calling on the province to reinstate a pandemic-era tax credit for Ontarians who plan getaways close to home.
The original staycation tax credit was introduced in 2022 to spur pandemic recovery for the tourism, hospitality and culture sectors. It offered a return of 20 per cent on accommodation expenses of up to $1,000 per person or $2,000 per family.
Last month, there were nearly 500,000 fewer recorded trips from Canada into the U.S. compared to February 2024, according to U.S. Customs and Border Protection data.
As Canadian travellers look beyond American destinations, the province's hospitality industry association wants the tax credit reinstated to encourage Ontarians to rebook their trips closer to home.
"Given current economic uncertainties, reviving this program would yield significant benefits for Ontario businesses, workers, and residents," says a letter from the Ontario Restaurant, Hotel and Motel Association (ORHMA) addressed to Premier Doug Ford, Tourism Minister Stan Cho, and Finance Minister Peter Bethlenfalvy.
The 2022 tax credit provided about $180 million to just over 900,000 families, tourism ministry spokesperson Denelle Balfour said in an email.
Asked if the province would consider bringing back the tax credit, Balfour said the government "will continually monitor the daily developments regarding tariffs and the potential impact on our tourism and culture sector."
Jasveen Rattan, ORHMA's director of policy and government relations, who was one of two signatories on the letter sent March 5, says she's hoping the government will step up like it did during the pandemic.
"People are more likely to look at how they're spending their money and eating out, and potentially trips are the ones that get cut first," Rattan said.
Bookings for leisure travel to the U.S. were down by 40 per cent in February compared to the same time last year, according to the Flight Centre Travel Group Canada. But Rattan says hotels in Ontario have also seen fewer bookings and more cancellations since the beginning of the trade war.
"We really are asking the government to reinstate the staycation tax credit so that we can push more domestic tourism to serve as a stabilizing force for businesses that are reliant on visitor spending," she said.
Encouraging Ontarians to travel and spend money within their own province would also help other local businesses hit by tariffs, Rattan added.
Local visitors more important this year: Destination TO
Even in Toronto, where domestic travellers already make up most of the city's visitors, a tax break could make a big difference, says Andrew Weir, president and CEO of Destination Toronto.
"What's clear now is that … the domestic traveller is going to be very important to us in the year ahead, even more so than we may have thought six months ago."
Aileen Heatherington, general manager of the Drake Hotel on Queen Street W., says her business is still recovering from the economic impact of the COVID-19 pandemic. A tax credit could turn another difficult situation into an opportunity, she says.
"Having a staycation tax credit would encourage people to spend locally, invest in local businesses and it would be really important for our economy," Heatherington said.
"The hospitality industry employs a lot of people and it relies on tourists and visitors to sustain itself," she said. "As summer approaches, we'd love to be able to take advantage of this opportunity and turn it into something positive for everyone."
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With files from Talia Ricci and Kirthana Sasitharan