Friday, February 29, 2008

Come for the hotel taxes, stay for the property taxes

As reported in the London Free Press, Board of Control recommended to Council yesterday that it petition the provincial government for the right to levy a hotel tax of up to three per cent to boost the $1.7 million the City already spends on promoting tourism. Provision in provincial legislation to allow implementation of the tax only by consent of the local hospitality industry would seem to beg the question: if hotels really think that investment in Tourism London provides returns to their industry, why don't they simply make contributions to the agency directly?

London's decidedly weak position as a tourist destination wouldn't seem to make extra taxes a very likely added attraction, but the idea is certainly consistent with City Hall's delusions that it can engineer tourism success — as one may recall, the last attempt to engineer one such triumph has cost taxpayers over $8 million and resulted in declining attendance at Storybook Gardens. The hotel tax would at least have the virtue of being relatively harmless to local taxpayers, but it's difficult to imagine that London's lack of tourist appeal has less to do with the city and more to do with a shortfall in promotional funding. But I may be wrong, and if I am then we can expect to be absolutely swamped with visitors if a tax on restaurant meals is also applied, as has been suggested as well.

Of course, the rationale that "other cities are doing it" exercises a particular hold on the imaginations of municipal politicians, who appear to be adamant that a new tax should not even be considered as "a tool" to reduce spending from other tax revenues, as Controller Gord Hume thundered. Small surprise there. But what happens if every city starts taxing and spending more just to lure the same pool of tourists from every other city? Simply more taxes and spending, but there's nothing in that idea to deter a politician.

Update: Coun. David Winninger repeats the now standard mantra of municipal politicians across the country that new taxing powers are necessary because "property taxpayers simply can't afford to keep pace with rising costs." Pardon me for asking such a simple question, but don't municipal politicians have any say these days in whether those costs must rise?


Jake said...

If they impose this tax on hotels, we won't see our property taxes offset a single penny. Just another reason for people not to come to London. When socialists like David Winninger are praising it, then we automatically know it's a cash grab and nothing more.

Most folks who come to the hotels in London are people who are traveling on Highway 401. Why has there been a huge boom in new hotels in recent years at Wellington and Exeter Roads? This has very little to do with destination tourism to London and more to do with the "pull-off-the-highway-pull-back-on" crowd.

The only reason they are staying in London is due to it being late at night and they need a place to hang their hat for a few hours. They are trying to get from point A to B--they care very little about visiting London and just came here to sleep. At most, they may go to White Oaks Mall to buy sunscreen at Wal-Mart and eat breakfast at a greasy spoon restaurant then hit the road.

The hotel occupancy rate in London is hovering around 60%--which isn't very strong to begin with. The bulk of this vacancy is from the crowd I just mentioned in detail. A hotel tax will just make these people think twice about spending the night here on their next road trip.

They also are trying to get a restaurant tax as well. Liquor tax looks like its on the tap too.Which, unlike the hotel tax, actually hurts Londoners more directly since most people who eat at our restaurants are Londoners.

If the province was wise, they would deny London the same, business killing taxes that Toronto has imposed.

JPM said...

I'm sorry, but London is not nor will ever be a tourist destination. It can be a nice place to live, though. Why spend money to promote London as a "destination" when that money could be spent on improving the driving conditions in town, fixing holes in the road, picking up the trash every week. Or that money could be used to not increase property taxes again. I really wish the priority were to keep London a nice place for Londoners to live. No one will ever travel to London to visit the Guy Lombardo museum, or to visit a rebuilt Wonderland gardens. But we all have to drive on lousy roads.

creme brulee said...

jake and jpm make good points; another harmful tax won't benefit many, attention should be given elsewhere.

a healthier city, especially the downtown, would be a boon to local citizens, which should be deforest city's top priority.