B&Bs get break on tax, but not Airbnb hosts

Bed and breakfasts will be spared a new four-per-cent tax on guest accommodations, council ruled Wednesday. But the tax will be collected from Airbnb hosts and from any establishment in Ottawa that uses a third-party home-sharing listing service to issue its invoices. Airbnb could be on the hook for $300,000.

The move comes a week after owners of small inns pleaded with Mayor Jim Watson and councillors to be exempted. It’s not fair to make those small businesses, already operating under small margins, collect a mandatory tax from guests to pay for tourism programs that rarely include bed and breakfasts, the owners said.

Since 2004, many Ottawa hotels have voluntarily collected a three-per-cent “destination marketing fee” from guests. The money goes to the Ottawa Gatineau Hotel Association, which gives the funds to Ottawa Tourism. Between $8 million and $9 million has been sent to Ottawa Tourism each year. About half of Ottawa hotels, representing 90 per cent of all the rooms, charge the destination marketing fee.

The 2017 Ontario budget allows municipalities to collect a mandatory accommodation tax from businesses providing accommodations for consecutive nights under 30 days. That includes bed and breakfasts and Airbnb hosts. The City of Ottawa proposes to begin the four-per-cent accommodation tax on Jan. 1.

Michael Crockatt, president and chief executive of Ottawa Tourism, said the mandatory tax “levels the playing field” and allows the organization to attract more tourists to Ottawa by marketing the city around the world. Crockatt said bed and breakfast operators always have a chance to work on Ottawa Tourism initiatives. But some of the bed and breakfast owners pointed out the Ottawa Gatineau Hotel Association, the industry’s main lobby group, which would effectively become the tax collector in the proposed scheme, doesn’t accept members who have fewer than 50 guest rooms. Small bed and breakfasts generally only have up to three bedrooms. Bed and breakfast operators will be able to apply for an exemption if the establishment is occupied and operated by the property owner, and is classified in the residential property tax class.