Go slow

My wife, Kathleen, and I own and operate a small inn in Wellington—three guest suites, growing to seven later this year. We made our original investment in 2009 based partly on my reporting on a succession of municipal studies that pointed to a shortfall of roofed accommodations in Prince Edward County. It seemed an opportunity.

choose to disregard or discount the arguments posed in the following paragraphs. This ox can feel the pointy end of the horn piercing his hide.

The matter of an accommodation tax will affect me directly. As such, it will surely strike some as out of bounds for this opinion monger. I would contend, however, that the grist for this mill is derived from personal experience, fears and ambition. Always was and will be. It’s not an apology, but rather a declaration. So, lets get to it.

I urge caution to the new council as it considers a new accommodation tax (proposed as four per cent of room night sales, half to go to Shire Hall coffers, half to the Prince Edward County Accommodation Association to promote and market the sector). Do some basic research before rushing in. Some investigation. The new council is encouraged to resist the temptation to lunge at a new revenue stream. At least until you consider issues of fairness, enforcement costs and the competitive landscape. There are some questions that need to be answered first.

This will be hard to do. Already folks inside and out of Shire Hall are calling dibs on how to spend the proceeds from a new accommodation tax. Some see it is an efficient way to both hobble growth of short-term accommodation in the County and fund affordable housing projects. A two fer of sorts. It sounds good. And it may be. But here are some reasons for caution.

For good or ill, Prince Edward County is, above all else, a tourist economy. It is our past, our present and our future. Past councils have deluded themselves into believing otherwise. We continue to pursue industrial investment like a chihuahua chasing a locomotive— with the same likelihood of landing its prey. We dabble in other things to demonstrate an open mind, or soothe a sentimental idea of this place. Yet our economic prospects are clear.

If fresh members are unsure about this point, I point you to a report presented to council last summer, requested by Councillor Brad Nieman, that provides a current picture about the County economy—specifically where the jobs are, where they are growing and where they are declining. Excluding public sector employment in health care, education and such, retail is the leading employer in the County—surely driven by visitor spending. This is followed closely by the accommodation and food service sector. Both categories are growing and adding jobs. Agriculture— the third leading private sector employer in the County—is, meanwhile, shedding jobs.

It is prudent, therefore, to tread carefully when wrestling away the golden egg from the goose that produced it.

Then there is the issue of fairness. Accommodation providers may seem an easy target— but they hardly represent the entire tourism sector. If the goal is to put a tariff on visitors—applying it narrowly to just one type of service provider is patently unfair. Why should one type of business pay a new tax while another serving the same customer escapes unscathed?

This is not to suggest extending the new tax net wider, but rather, given that accommodation providers represent just a portion of the tourism dollar generated in this economy, that care be taken to ensure an accommodation tax isn’t viewed as the cure for all that ails our community.

Then there is the matter of regional competitiveness. Shire Hall has a poor track record of grasping the concept that its economy exists in a competitive landscape. Accommodation providers from Brighton to Napanee currently advertise themselves as the Gateway to Prince Edward County. Their marketing is predicated on the prospect of winning the tourism dollars that have been attracted by this community. Fair enough. However, a new council must weigh the allure of a new tax against the competitive disadvantage it will put on County accommodation providers.

Put simply, I am perfectly happy to pay this tax— when, and only when all hotels, motels and Airbnbs in the region are paying the same amount. Otherwise the County is driving business and investment out of the County and into the arms of investors in Quinte West, Belleville and beyond.

Finally, there is the question how much regulation does Shire Hall want to heap upon accommodation providers—all at once. The column was, and remains, supportive of regulating short-term accommodation that will impose a broad net of rules on this sector— covering where they can be located, density as well as an array of operational requirements.

Licensing fees and new costs of compliance are likely to run into the thousands of dollars per guest room. Piling on a new tax in the same year seems rash—and unreasonable.

There is also the cost of administering a new tax. How much will it raise? How much is it likely to cost to collect and administer this new tax? Better be certain we will take in more than we are likely to spend, before starting down this road.

I acknowledge I am writing these words from self interested perspective. Yet sometimes self-interest helps to focus one’s attention. But let’s be completely clear—those promoting this new tax are also motivated by self-interest—an eagerness to put their hands on a new revenue stream.

The only question that remains to be answered: Is a new tax fair, right and reasonable at this time?

Not in 2019.

rick@wellingtontimes.ca