Plan for hotel, short-term rental tax coming 'in the near future,' Wynne says

The province will move forward on a request from John Tory to allow the city to levy a tax on hotels and short-term rental accommodations "in the near future," Premier Kathleen Wynne said Tuesday, a day after the Toronto mayor issued a list of demands ahead of the provincial budget, including the new tax.

Tory set out his pre-budget asks for the city, including "appropriate matching funds" to federal infrastructure dollars, and giving the city authority to tax hotels and short-term rental accommodations, includingAirbnb, in a letter and accompanying 14-page "summary of requests." The correspondence, which was dated Monday, was directed to Ontario Finance Minister Charles Sousa.

Asked about the demands following an event Tuesday, Wynnesaid officials in her government are meeting with their counterparts at the city on what a hotel and short-term accommodation tax "means."

"We're going to be able to move forward with [Tory] in the near future," Wynne said.

She could not offer a specific timeline when asked, but acknowledged that, "I know he'd like to have this very soon."

No new asks

While the mayor admits his letter "does not contain any new asks," he stresses two "immediate, time-sensitive priorities": the hotel tax, andfunding for infrastructure projects.

The province should "become a full partner in cost-sharing of major infrastructure projects going forward," Tory says in the letter.

The city expects that the province will match infrastructure funding that was announced in last month's federal budget, including matching funds for specific programs, and include the city in discussions about how those funds will be allocated.

"Without real tri-lateral partnership, the prosperity and competitiveness of our city and our region is at real risk," Tory wrote. "Toronto must remain affordable to people of all income levels and our transit and transportation systems must be expanded to meet the rising demands of a growing region."

According to the mayor's letter, transit-related priorities include:

• Building the Eglinton East LRT, Waterfront Transit and the Relief Line.
• Investing in social housing, including addressing a repair backlog at Toronto Community Housing.

The province must also recognize its "obligation" to help the city maintain the Don Valley Parkway and Gardiner Expressway, "given the premier's recent announcements rejecting our toll proposal," Tory wrote.

Wynne said Tuesday that her government has invested heavily in transit, and will continue to work with municipalities across the Greater Toronto Hamilton Area (GTHA).

"I don't see any point of contention here," Wynne said.

On the issue of tolls, she noted that the province has doubled the gas tax, which will add $170 million a year to city coffers starting in a couple of years.

"So I would say that to MayorTory and to the council: 'We're going to continue to work in partnership with you. We believe in building transit, we are building transit."

Property taxes not enough

The second immediate priority outlined in Tory's letter is giving the city the authority to levy a tax on lodging, including hotels and short-term accommodations.

The city had previously asked the province for permission to impose a hotel and short-term accommodation tax that would see hotels pay four per cent, while short-term rentals would pay up to 10 per cent.

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City council is considering changes to regulations for the short-term rental market, which is dominated by Airbnb but also includes other companies.

The city budget banks on making around $5 million from the new tax, which could be implemented by the end of this year. Officials said last month that there will be several months of consultation and tax design work before it can start collecting money.

Other asks in Tory's letter, which is dated Monday,include funding for public transit, Port Lands flood protection, child-care subsidies and local health initiatives.

Tory is asking Sousa for his "full consideration" of all of his requests as he prepares the budget, which could be tabled by the end of the month.

"They reflect the needs of nearly three million Ontario residents as well as the well-established public financing principle that social programs and large-scale infrastructure projects that benefit an entire region should not be funded from the local property tax base alone."