Dysart et al has adopted a new bylaw that will tax tourists staying in short-term rentals (STRs) in the township.
The bylaw, expected to come into effect on October 1, enacts a municipal accommodation tax (MAT) that will impact properties that are rented for 28 days or less by one tenant.
The municipality adopted the tax rate at two per cent. Dysart, which is a part of the County of Haliburton, is the only municipality in the county to set a lower tax rate; Algonquin Highlands, Minden Hills, and Algonquin East have all implemented the MAT at its typical rate of four per cent (Algonquin East is still awaiting the final drafted bylaw). Only lower-tier municipalities can enact the tax, which is why the rate is varied across Haliburton.
“I just don’t know how much tax we can pile on people here,” said Dysart’s mayor, Murray Fearrey, in a council meeting on April 23. “We dare to be different in Dysart.”
He told council members that while he supported the higher rate initially, the municipality had to take into consideration other financial factors, such as the federal government’s recent proposal to up the capital gains tax.
Talks surrounding the MAT have been taking place across the county since last year, though the tax itself is part of provincial legislation that has existed since 2017. The legislation was created to provincially standardize a tax that was already being used by some municipalities and hotel associations in Ontario. At the discretion of individual municipalities, the tax can apply to tourist accommodations including STRs, hotels, motels, and B&Bs.
Scott Ovell, director of economic development and tourism for Haliburton, says that while the county is only applying the tax to STRs, they may expand it to other accommodations in the future.
In a presentation to Dysart council on April 23, Ovell said that a generous projection estimates that a four per cent tax could generate revenue upwards of $2 million a year. In Dysart’s case, that projection would be cut in half.
“Two per cent is better than zero,” says Ovell, who does not have any influence on what rate at which municipalities adopt the tax.
At least 50 per cent of the revenue from the tax must go towards the promotion and development of tourism in the municipality. This terminology is purposefully broad so as to allow individual municipalities to determine what they need to support local tourism, says Ovell. In Haliburton specifically, this could look like enhancing tourism marketing and providing funding to local events.
But some STR owners in the community are concerned about the tax having the opposite effect on tourism.
“I’ve heard from guests that they’re going to stay in Haliburton this year, but are planning to look somewhere else next year,” says J.T. Lowes, the owner of All-Season Cottage Rentals, based in the county. “If people could save even a couple hundred bucks going somewhere else, then they will.”
Professional rental agencies like All-Season are equipped to take on a tax like this at little to no hassle for the property owners, says Lowes, but it will be challenging for individual rental-property owners. In particular, those working with major companies like Airbnb or VRBO will be personally responsible for implementing the tax in their rental fees and remitting them to the county collection agency.
Lowes says that this new tax is set against a larger backdrop of controversial STR bylaws in Haliburton. Starting October 1, STR owners in the county will be required to obtain a license to rent out their properties. It also implements more stringent occupancy limits that cap rental properties at two beds per bedroom, which Lowes says is challenging for rooms with multiple bunk beds.
According to the STR bylaw, the county will have a greater capacity to enforce compliance with building regulations, fire codes, and other liability concerns.
“The ultimate reason the county has been getting a lot of pushback on the bylaw is because of a handful of really irresponsible Airbnb owners,” says Lowes, citing party cottages owned by landlords who rarely visit the properties. While Lowes recognizes the need for the county to take action on disruptive rental properties, he says the county missed an opportunity to tailor a bylaw to specific local needs. Instead, he says they’ve copy and pasted pieces of existing policy from other municipalities.
In the April 23 council meeting in Dysart, councillor Pat Casey noted that the focus on STR bylaws is to “control bad actors on the lake,” and cautioned against turning the new tax into a “massive revenue generator.”
But Lowes wonders if Dysart’s tax is so low that it might not make a difference at all.
“The question is, would the county have been better off forgetting the tax and maximizing on tourism income that is already coming to the area?” he says. “Will they end up giving away more tourism income than they’re pulling in?”
Related Story Tiny Township extends controversial interim bylaw that halts development along its shoreline
Related Story Cottage Q&A: How the “bonus year” can reduce your capital gains tax
Related Story Town of Huntsville introduces 24-hour short-term rental hotline