Visitors could face an increased price on accommodation by next summer with a proposed tax increase on overnight stays.
Tourism Sun Peaks (TSP) is in the process of increasing the Municipal Regional District Tax (MRDT) from two to three per cent. The MRDT is an additional tax levied on guests when paying for an overnight room and has been at two per cent in Sun Peaks since 2004.
“You’re paying for the room, the provincial and federal taxes, and you’re paying an additional two per cent. That MRDT is widespread across the province, I don’t know any destination that doesn’t have it,” said Christopher Nicolson, president of TSP.
The optional increase to a three per cent MRDT was legislated by the B.C. Government in September 2015. The tax increase is optional and each municipality has the choice whether or not to raise the rate for their visitors.
Over 50 municipalities across the province have implemented a two per cent MRDT tax. So far only the City of Vancouver has increased the MRDT to the new maximum of three per cent, according to the Ministry of Finance.
The increase in the MRDT in Sun Peaks will offset costs that are being lost from a change in another tax on overnight accommodations known as the RMI.
The Resort Municipality Initiative fund (RMI), which is a part of the provincial sales tax, has new stipulations and will need to be specifically used for infrastructure funding going forward. The RMI dollars have been imperative to funding big name musicians and other high profile events to Sun Peaks.
“I would say we are the destination across the province that has been able to demonstrate beyond any shadow of a doubt a massive increase on return of investment on the RMI dollars, however it’s gone into events it hasn’t necessarily gone into infrastructure,” Nicolson said.
The intent of implementing the increased percentage on the MRDT tax is to offset the lost RMI dollars to continue growing important events around the community.
If a resort municipality is to increase the MRDT to three per cent, two tenths of those funds will be collected by the provincial government to be used as an event marketing fund. It is still unclear how that fund will work, but TSP plans to apply to use that money to continue growing events in Sun Peaks.
“The intent is we have a lot of events, everything from the Spartan Race to the wine festival, those are events that we would expect because they successfully drive visitation,” Nicolson said. “We would apply with those kinds of events to try and increase the profile.”
The MRDT is currently used for destination advertising. Essentially, the guests are paying a tax that in turn is used to attract more guests to Sun Peaks. Ads on television and in international markets, such as Australia, are funded through this tax.
The process to increase the MRDT is expected to take between six and nine months, which means it won’t be implemented in Sun Peaks until next summer at the earliest.
The process includes getting support from the Sun Peaks Mountain Resort Municipality, Destination BC, as well as going through a very thorough application process. Over 50 per cent of accommodators representing over 50 per cent of the rooms will also have to approve the tax raise.
The tax raise has been approved by the TSP board of directors. The municipality has expressed support and over 50 per cent of accommodators have agreed to the raise, although Nicolson said they are still reaching out to some of the hotels.
“We’re going through that. We want to talk to all the operators and go through to make sure everyone is fully aware,” Nicolson said.
“It doesn’t affect the residents and it doesn’t affect the individual businesses. It’s a flow through from the guests.”
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