Sarnia imposes 4% tax on hotel rooms to increase tourism

Cathy Dobson Sarnia’s decision to impose a 4% tax on visitors who stay at its hotels and motels will drive away tourists, a city councillor predicts.

Cathy Dobson 

Sarnia’s decision to impose a 4% tax on visitors who stay at its hotels and motels will drive away tourists, a city councillor predicts.

“Two years from now we’ll have the data to see if this tax impacts tourism negatively,” Bill Dennis said.

“I hate to say this, but I bet you someone will come up with the idea of increasing it in a few years. Taxes never go down.”

Dennis was one of three councillors who voted against the Municipal Accommodation Tax in a 6-3 vote on Nov. 18

Another was Coun. Terry Burrell, who called it taxation without representation because the tourists who pay it don’t get a say.

Mark Perrin, executive director at Tourism Sarnia Lambton, the organization that initiated the idea, spoke to council prior to the vote.

At least 40 Ontario municipalities already add a MAT tax to the bill on short-term accommodations like hotels, motels, Airbnbs and bed and breakfasts, he said.

Sarnia is home to 11 hotels and inns with 450 rooms. Taxing them and 150 short-term rentals like Airbnb will generate an estimated $300,000 a year, Tourism Sarnia-Lambton estimates.

Half the money will be used by Perrin’s office for tourism promotion. Sarnia gets the other half, and will hopefully use it to attract major tourism events and pay for tourism infrastructure, he said.

Coun. Nathan Colquhoun brought forward the motion to approve a 4% tax, effective Jan. 1.

Colquhoun, who was deeply involved with the now defunct Artwalk, said major events need municipal support and a hotel tax can provide it without burdening city taxpayers.

“I understand it’s contentious,” he said later. “But I think it’s a good way to promote tourism.”

The volunteer-driven Artwalk drew large crowds to Sarnia’s downtown for 16 years. Had the city given it a break on municipal fees, such as the thousands of dollars it cost to shut down Christina Street, it would have been more viable, Colquhoun said.

Tourism will grow and local hotels will profit if the city has a revenue stream dedicated to tourism paid for by the 4% tax on out-of-towners, he said.

“There’s real economic growth that can come from being a place that people want to go to.”

Dennis fears the tax will discourage people from visiting Sarnia, especially families.

“But if we see in a couple of years that is doesn’t affect our hotel industry, I’ll be the first to take my hat off to the supporters of this,” he said.

Point Edward council, home to many of Sarnia-Lambton’s hotels, approved a 4% MAT tax in October.

Lambton Shores, home to Grand Bend, has yet to decide.