Toronto city council approves 4% tax on hotels and short-term rentals

Toronto city council has approved a new tax on hotels and short-term accommodations such as those listed on Airbnb and similar sites.

The four-per-cent tax won out over a surprise motion to hike the rate to six per cent.

The move comes just days after Mayor John Tory's executive committee approved a four-per-cent tax for short-term rentals.

• Toronto's executive committee votes for 4% hotel tax

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. Last week, Tory called the changes "fair and consistent."

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

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

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.

The city expects to bring in some $16 million from the new levy.