Former mayoral candidate sees opportunity to tax big corporations as STR debate continues

Jim Riches, treasurer of the North Taylor Road Cottagers Association and a candidate for Kawartha Lakes mayor last October, lives right next door to a short-term rental (STR). He opposes on principal STRs being regulated by a city-led bureaucracy whose funding he believes will eventually have to come from Kawartha Lakes taxpayers.

Riches proposes instead that a well-thought out Municipal Accommodation Tax (MAT) applied to each cottage rental transaction on AirBnb, VRBO or Kijiji and collected and distributed by the on-line booking agent involved in that transaction should be seriously considered. Riches believes MAT would provide a ready stream of income to Kawartha Lakes that could be allocated back to the communities impacted by STRs in the form of road services, funding for bylaw officers if necessary and service improvements for local taxpayers.

He believes if money is raised from the platforms on each transaction, then that’s the way to fund anything that might be needed, including enforcement if necessary.

For those unfamiliar with MAT, they can be applied to paid accommodations in Ontario occupied for a duration of less than 30 consecutive days. This includes stays at hotels, motels, lodges, resorts, bed and breakfast or any place an accommodation is rented for a fee, with some exemptions.

The MAT applies only to the accommodation charges and not associated charges, such as meals or room incidentals, so long as these amounts are itemized separately on the bill. Municipalities who participate are required to share a portion of the MAT with an eligible tourism entity to support sustainable funding for local tourism initiatives.

“STRs have existed for hundreds of years,” Riches said, “but something very disruptive has occurred to make them balloon out of control. Software companies have become the ‘hotel front desk’ without having to be attached to a brick-and-mortar building, and they are able to connect renters with rental units, and generate revenue via service fees. These simple service fees have made these software companies very rich and the municipal process of taxing brick-and-mortar buildings effectively useless.”

Riches believes these software giants are disrupting communities without consequences and that Kawartha Lakes should apply some consequences onto these ‘hotel front desk’ software companies in the form of MAT.

“It really angers me,” Riches said, “how the creators of community chaos, AirBnb, VRBO and Kijiji, get off scot-free and rake in millions of dollars in revenue with no consequences.”

Riches said this MAT will pull in revenue by using the software companies’ own methods against them. Riches does not want the accommodation owner to do any of the labour involved in collecting and dispensing the MAT to the appropriate municipal government. Riches believes all the administrative work can and should be done by the software firms with virtually no need for any additional staff likely at the municipal level.

Riches thinks his idea is the best way to go, but is fearful that instead of creating this “potential community managed revenue stream” the city will instead choose some kind of STR registration bureaucracy “that will most definitely become a money pit that further punishes taxpayers.”

“Most other municipalities have let their property tax revenue-focused city staff dictate the solution to STRs to be entirely regulatory, completely missing the potential modern revenue stream and community betterment potential,” Riches said. “The creation of new bylaw regulations seem to further ruin STR stressed communities by requiring other homeowners to become volunteer bylaw officers and snitch on each other. City staff are very good at making taxpayers the administrators of their poorly thought out and ineffective regulations because they do not know any better.”

Riches is concerned that a regulatory structure, as proposed by the current bylaw being discussed in Kawartha Lakes, will cause an escalation in community tattling “making the community that I live in less functional while city staff wrongheadedly punishes property owners with idiotic registries and fines.”

“Soon I will be tasked,” Riches said, “to allocate a majority of my time to police my community for STRs and go to war with my neighbours while the software companies who created this problem laugh all the way to the bank.”