Unaccommodating

It didn’t have to be this way. It needn’t have been controversial at all. Shire Hall might have avoided much of the blowback heading its way, had it simply managed the introduction of a Municipal Accommodation Tax (MAT) with little less urgency and a truckload more professionalism. (I must inform my readers that I am writing, once again this week, about an issue that affects my business and family directly, so you may choose to read the following with squintyeyed circumspection.)

Instead, Shire Hall in its haste has sown mistrust and skepticism among those few who are aware of the coming tax regime on their businesses—and simply ignored the cohort that doesn’t know what is coming at them. It bodes poorly.

To be absolutely clear, the proposed MAT is a responsible and appropriate means by which the municipality might share more directly in the visitor sector economy. I suspect that few accommodation providers have serious objections to the MAT if adopted in a fair and reasonable way.

That, however, is not on the table. The proposal before a special committee of council tonight is to ram through a brand-new tax on small, local businesses, impose it in less than 90 days—without any meaningful consultation— and someday in the foggy future Shire Hall will figure out how to divvy up the revenue. Who does business this way?

I doubt this would work even if there were a solid basis of trust between small business and local government. But there isn’t, so it won’t. As it is, this proposal represents little more than the expropriation of small business revenue.

I said, “I suspect” that most of those affected by this new tax will be amenable, but the truth is I don’t know if they are or not. And neither does Shire Hall. For no one has asked them. There has been almost no consultation with the sector that will be burdened with this new tax regime.

Literally, the only consultation has been with one local accommodation organization that represents 10 inns and B&Bs, a lawyer, a provincial official, an Airbnb rep, another from VRBO and an official from the Tourism Industry Association of Ontario.

There are hundreds of accommodation providers in the County—most are small, most are family-owned businesses—but Shire Hall decided it only needed to hear from a group representing just 10. In no universe can this be considered reasonable or appropriate.

It is not as though they don’t know how to consult properly. When the municipality rolled out regulations for short-term accommodations, Shire Hall held several widely attended and well-informed public meetings that ultimately helped shape the new rules and made adoption smoother.

In the matter of a new tax, however, the current plan is to ram it through, siphon revenue from small businesses and then consult with them.

What might Shire Hall have learned, had it consulted properly?

June 1 implementation is ludicrous. It will prove to be unworkable for most. Set aside the fact that most businesses are being blindsided with this information with less than 90 days notice, the bigger issue is that they are asking these folks to implement and manage an entirely new tax regime at one of the busiest points in a short season. It is difficult enough to manage and staff in a seasonal market—tossing another set of administrative burdens on top of small business at this point in their cycle is simply irresponsible and tone-deaf.

The report accompanying the proposed MAT suggests a June 1 implementation allows “sufficient time for the municipality to undertake an informative public relations campaign”. That’s super. But there is literally no allowance made for the businesses that are expected to collect this tax on behalf of Shire Hall. This is unacceptable.

Proper consultation would have made clear, too, that a half-baked plan was doomed. The proposal on the table currently asks these small businesses to collect the tax, give it to the municipality, and only then, will it consult with the folks about where it will be spent. It is disrespectful of the folks they need to be partners in this enterprise.

It is also clear that some folks at Shire Hall have designs on keeping more than their share of the tax revenue stream that the municipality is entitled to under the provincial legislation. While the MAT is a flow-through tax—meaning guests will pay the tax rather than the business directly—these accommodation providers will bear increased administrative costs, as they do with every other tax. The underlying agreement inherent in the Transient Accommodation Legislation is that in exchange for this sector collecting this revenue on behalf of the municipality, the municipality shall fund tourism promotion with half of the proceeds, in order to offset this increased small business burden. This is set out in black and white in the provincial law.

But it is not clear that our local officials understand this. Too many have only recently discovered the financial mess in which they are ensnared, and are spellbound by the prospect of a new stream of cash into Shire Hall coffers.

Fairness and reasonableness dictate that the terms of the revenue sharing from this new tax must be hammered out before businesses are asked to implement it.

Council must send this proposal back, pull together a fully formed plan, and then ask the affected businesses to respond. January 1 is at the low ebb of the County accommodators business cycle. For most, it is the beginning of a new fiscal year. This is logically and reasonably when such a new tax should be implemented. This gives Shire Hall the time to consult properly—to understand the issues, to sort through the concerns and ensure a solid partnership.

A MAT is ultimately a partnership between a select group of businesses and the municipality. A partnership requires trust and accountability. The hamhanded proposal before council tonight has neither.

rick@wellingtontimes.ca