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HomeMy WebLinkAboutCAO-016-25Staff Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: General Government Committee Date of Meeting: October 6, 2025 Report Number: CAO-016-25 Authored By: Paul Pirri, Director, Economic Development Submitted By: Mary-Anne Dempster, CAO By-law Number: Resolution Number: File Number: Report Subject: Proposed Municipal Accommodation Tax Program Recommendations: 1.That Report CAO-016-25, and any related delegations or communication items, be received; 2.That the proposed Municipal Accommodation Tax as outlined in the report be endorsed; 3.That Staff be directed to complete a business case to support the implementation of a tourism focused municipal services corporation; and 4.That Staff develop a Municipal Accommodations Tax by-law in accordance with this report. Municipality of Clarington Page 2 Report CAO-016-25 Report Overview This report provides an overview of the Municipal Accommodation Tax (MAT) framework including a jurisdictional scan of the program. It further highlights a proposed local implementation of a MAT. 1. Background 1.1 A Municipal Accommodation Tax (MAT) is a local tax applied to the cost of short-term accommodations, such as hotels, motels, and vacation rentals. Accommodation providers collect the tax from guests and remit it to the municipality. Revenue generated from a MAT is typically reinvested into tourism promotion, tourism -related infrastructure, and placemaking initiatives that support local economic growth. 1.2 At it’s meeting of January 13, 2025, General Government Committee passed a resolution requesting “that Staff be directed to take the necessary steps to implement a Municipal Accommodation Tax and report back to Council with the required revenue agreements and enabling by-law”. 1.3 Further, at the same meeting, General Government Committee also adopted the Economic Development Action Plan. The final action item under the third priority, Adopting a Best-in-Class Mindset, was to “Investigate the feasibility of developing and implementing a Municipal Accommodation Tax” in 2026. 1.4 Staff have Initiated the implementation process for a Municipal Accommodation Tax in Clarington. 2. Jurisdictional Scan and Policy Context Regional and Provincial Context 2.1 According to a survey conducted by the Tourism Industry Association of Ontario (TIAO) in Q1 of 2025, 73 municipalities across Ontario have adopted a MAT to date, including all of Clarington’s lakeshore neighbours within Durham Region, as well as many more throughout the Greater Toronto and Hamilton Area (GTHA). The majority of these municipalities have implemented a MAT rate of 4 – 5 per cent. As a result, Clarington residents contribute to tourism development when they travel to many destinations across Ontario, yet visitors to Clarington are not currently contributing in the same way. Municipality of Clarington Page 3 Report CAO-016-25 Strategic Rationale for Implementation 2.2 Implementing a MAT would bring Clarington in line with regional and provincial best practices, ensuring the municipality remains a vibrant community and destination. Most importantly, it would provide a dedicated, visitor-funded revenue stream to support local tourism and placemaking initiatives, reducing the reliance on property tax dollars and helping to grow Clarington’s visitor economy in a fiscally responsible manner. Governance and Revenue Allocation 2.3 As outlined in Ontario Regulation 435/17, municipalities are required to share a minimum of 50 percent of Municipal Accommodation Tax (MAT) revenues, after deducting reasonable costs associated with collecting and administering the tax, with an eligible tourism entity for the purpose of promoting tourism within the municipality. 3. Clarington Municipal Accommodation Tax 3.1 Having undertaken a scan of various Municipal Accommodation Tax frameworks, staff are proposing the establishment of a MAT within the following parameters. Applicable Accommodation Types 3.2 Clarington is home to four hotels, two motels, and a growing number of vacation rentals listed on third-party platforms such as Airbnb and Vrbo. Staff recommend that the Municipal Accommodation Tax (MAT) be applied to all three of these accommodation types. In addition, Clarington has several bed and breakfast establishments that operate independently and are not listed on third-party platforms. Some municipalities have chosen to exempt these types of accommodations if they meet specific criteria, while others have opted to include them. Staff will continue to review best practices to recommend the most appropriate approach for Clarington. 3.3 Additionally, Clarington hosts a number of campgrounds, including Darlington Provincial Park. Based on discussions with other municipalities, staff understand that MAT is typically applied only to roofed accommodations with access to hydro and water. This generally excludes tents, trailers, and other non-permanent structures. It is also important to note that MAT cannot be applied to accommodations operated by Crown agencies, such as Ontario Parks. As such, campgrounds, including those operated by the Crown, will be excluded from the MAT. Municipal Accommodation Tax Collection Partner 3.4 The Ontario Restaurant Hotel & Motel Association (ORHMA) is a not-for-profit business organization that provides Municipal Accommodation Tax (MAT) collection services to Municipality of Clarington Page 4 Report CAO-016-25 municipalities across Ontario and in parts of Nova Scotia. Currently, ORHMA collects MAT on behalf of 31 municipalities in Ontario and an additional 3 in Nova Scotia. 3.5 ORHMA’s Ontario-developed remittance platform facilitates the collection of MAT revenues from accommodation providers within a municipality and remits the funds directly to the municipality on a pre-determined schedule. In addition to tax collection, ORHMA offers a range of support services, including consultation sessions with municipal staff, remittance training for accommodation providers, assistance with MAT by-law development, and access to tailored market statistics. 3.6 To access these services, municipalities are required to pay a one -time setup fee of $3,000. Ongoing collection fees are charged at a rate of 1.8% for hotels and motels, and 5% for short-term rentals (e.g., Airbnb, Vrbo). These fees are applied to the total MAT revenue collected (i.e., $7,200 in fees on $400,000 of hotel/motel MAT collections). 3.7 Given the cost-effectiveness of this model and inability to perform the function in a more cost-effective manner, Staff recommend that Clarington partner with ORHMA for MAT collection services. Municipal Accommodation Tax Eligible Tourism Entity 3.8 As of 2025, Clarington does not have an eligible tourism entity of its own. To address this, staff are proposing the incorporation of a non-profit Municipal Services Corporation (MSC) to fulfill this role. The creation of an MSC for this purpose is a common approach among municipalities that have implemented a MAT, with examples including the Town of Whitby, the City of Pickering, the City of Vaughan, and the Town of Ne wmarket, among others. 4. Next Steps 4.1 In the coming months, Economic Development staff will continue working with relevant internal departments and divisions, including Finance, Legal Services, and Communications, to ensure alignment on project goals and miles tones. This coordination will ensure a comprehensive and well-supported approach to MAT implementation. Key deliverables will include:  Consultation with short-term rental platforms such as Airbnb, Vrbo and Booking.com;  Creation of informational and engagement materials for stakeholders;  Review and approval of draft MAT by-law by Council; and  Review and approval of business case study for the establishment of a Municipal Services Corporation (MSC) focused on tourism and placemaking 4.2 Staff will also initiate outreach to local accommodation providers to share information, gather feedback, and build awareness of the proposed MAT framework. Municipality of Clarington Page 5 Report CAO-016-25 4.3 An update and recommendation report will be brought forward to Council in Q1 /Q2 2026, outlining key recommendations, stakeholder feedback, and next steps for moving the MAT initiative forward. 5. Financial Considerations 5.1 This report is seeking endorsement on the staff recommended approach to the implementation of a Municipal Accommodation. If endorsed, the Municipality will incur a one-time setup fee of $3,000 to engage the Ontario Restaurant Hotel & Motel Association as the municipality’s collection Partner. 6. Strategic Plan This report supports Priority G.1.2: Continue to support business and industry to thrive by providing a direct funding source to support tourism-based businesses. 7. Climate Change Not Applicable. 8. Concurrence Not Applicable. 9. Conclusion It is respectfully recommended that General Government Committee endorse the establishment of a Municipal Accommodation tax as described in this report. Staff Contact: Paul Pirri, Director, Economic Development 905-623-3379 x2424 or ppirri@clarington.net Attachments: Not Applicable Interested Parties: There are no interested parties to be notified of Council's decision.