Committee gets an earful on hotel tax
Terry Halifax
Northern News Services
Hay River (Feb 12/01) - Hay River hotel owners, town councillors and business owners are united in their opposition to the government's proposed five per cent tax on hotel rooms.
"This is a highly visible tax and will have the same popularity rating as the GST," Don Ferguson, vice-president of the NWT Hotel Association, told the standing committee on governance and economic development.
"Joe Handley would be as much appreciated as Brian Mulroney," Ferguson said during a public meeting on the proposed tax in Hay River Feb. 7.
Chair of the standing committee, Floyd Roland said the new tax would generate an estimated $900,000 to $1.3 million. Costs to administer the tax was originally estimated at $250,000, but later reclassified at $100,000.
The bill will go back to the legislative assembly for third reading. The second reading was passed by a 10-8 margin and members expect the third vote to be just as close.
Ferguson said hotel association surveys of 254 NWT residents found that 95 per cent did not want the tax.
The survey also found that 80 per cent of all travellers here are NWT residents and that 50 per cent of all hotel guests in the NWT are GNWT employees, agents or contractors.
"We are not taxing the tourists, we are taxing ourselves," he said.
Ferguson also questioned the panel on the federal government's claw-back agreement with the GNWT, which states that for any new tax imposed, transfer payments would be reduced by 80 per cent of the new revenue.
"Factor in administration costs and a net loss results," he said.
Duane Morgan, president of the Hay River Chamber of Commerce, said the 88 members of the chamber voted unanimously to oppose the new tax.
"This is a discriminatory tax," Morgan said, and coupled with high fuel costs, will make tourism in the NWT less competitive.
Beth Phillip from the Snowshoe Inn in Fort Providence, said tourists are already put off by the high cost of hotels in the North and the tax will only add to that.
"I tell them (a room is) $100 dollars and their jaw drops every time," Phillip said.
Hay River mayor Duncan McNeill called the tax "counter productive" and the town was opposed to it for many reasons.
He disputed the revenue drawn from the hotels would be spent on the entire tourism industry and there was no guarantee the community would receive fair representation of the revenue gained by the government.
"There must be a broader base of taxation in place, if we are really going to benefit the tourism industry," McNeill said.
"Are we putting the need for taxation ahead of the need for true business life itself," he asked the committee. "The enforceable portion of the proposed legislation is unacceptable -- it's going to create more bureaucracy and no one is going to benefit."
"Quite frankly, it's a crock," he concluded.
