Hotel tax credit for aiding refugees may violate law
Staff recommend Niagara Falls not provide credit for housing Ukrainians
City staff say Niagara Falls would be at risk of violating the Municipal Act if it were to provide a property tax credit to hotels that help resettle Ukrainian refugees.
In March, Mayor Jim Diodati received a letter from a member of a community organization calling for a one-time municipal property tax credit for any hotel in the city that chooses to provide rooms as temporary accommodation for refugees fleeing the Russian invasion of their country.
“From the beginning, the City of Niagara Falls has been incredibly supportive to the Ukrainian-Canadian community, and the larger Ukrainian diaspora worldwide,” Josh Bieuz-Yasyszczuk, founder and volunteer community director of NiagaraGives, said in the letter.
“With an already strong Ukrainian community, Niagara is sure to become home to many Ukrainians seeking a life away from war. These refugees will need our help to resettle and rebuild their uprooted lives.”
NiagaraGives describes itself on social media as a collective of local businesses, charities, nonprofits and individuals working together to help bring the spirit of the GivingTuesday movement to Niagara.
Bieuz-Yasyszczuk said hotels that provide a set number of rooms in Niagara Falls to be used as temporary accommodation would be “voluntarily taking a financial loss, losing out on the revenue provided by each room,” which is why he requested the city provide tax incentives.
City council referred the matter to staff during its March 22 meeting.
In a report to go before council Tuesday, staff recommend council direct them to forego the tax credit, noting that by creating one the city would be at risk of violating Section 106 of the Municipal Act that prohibits municipalities from financially assisting businesses and commercial enterprises.
Section 106 of the Municipal Act indicates a municipality shall not assist, directly or indirectly, any manufacturing business or other industrial or commercial enterprise through the granting of bonuses for that purpose, such as giving a total or partial exemption from any levy.
“As a hotel is a commercial enterprise and a property tax credit offsets the property tax levy, the city would be directly assisting a commercial enterprise,” said the report.
“The city is obligated to bill and collect property tax levies on behalf of the Niagara Region and school boards. The Niagara Region must also follow rules as outlined in the Municipal Act and as such would also be at risk of violating (the Municipal Act) if they were to offer such a credit.”
Staff said the rates for the education portion of the tax are established by the finance minister.
Education tax rates are set in Ontario Regulation 400/98 under the Education Act.
“NiagaraGives may wish to appeal to the province for amendments to the Municipal Act and Education Act to meet their objectives,” said the report.