Hotel tax hampered

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A generation ago, Yellowknife was a not a destination for world travellers. Government was taking over but it remained a rough and tumble mining town with smokestacks across Back Bay spouting sulphurous plumes into the air.

Most rooms in hotels were populated by people who were here for business such as miners, professionals and government workers. The city served as a display case for the territory’s mineral boom.

Then, about 20 years ago, off-the-beaten track tourist destinations started coming into fashion. Yankees looking to beat the heat turned to Canada’s North but Japanese tourists especially, eager to see the aurora, began boarding planes and crossing the Pacific.

Today, tourism is booming more than ever. Japanese tourism has expanded to include Chinese and Korean tourism. The GNWT recently announced that about 110,000 people visited the territory last year and spent $203 million.

This is why it is good news the legislative assembly, finally, after 20 years of debate, passed Bill 18: An Act to Amend the Cities, Towns and Villages Act. The bill permits communities, including Yellowknife where most of the tourists comes, to impose a tax of up to four per cent on tourist accommodations.

The fees raised by the hotel tax would be given to a destination marketing organization. So long as the levy doesn’t scare away potential visitors, it could be a useful means to promote the city.

But of course, it could not go ahead without one important caveat from the GNWT – travelling government workers will be exempt from paying it. People travelling for medical reasons, which the GNWT also pays for, will likewise be exempt.

This is no small thing. Past estimates from the city put revenues from the hotel tax at around $750,000 and $1.5 million per year but Ed Romanowski, president of Explorer Hotel, estimates 25 to 30 per cent of his guests would be excluded from paying the tax because of the exemptions.

In a letter written to MLAs, Romanowski said administration of the tax is being left to hotels and hinted that the extra paperwork will lead to even higher hotel rates, with fewer returns to communities on the tax.

“The cost of administration would be in the millions of dollars for industry and government,” he said.

There is a definite danger on the horizon to consider. Tourism is booming and that’s great. It’s a blessing that scores of people want to visit our city while it is dark outside and -30 C but tourism desires are fickle. We already saw this when the Japanese tourism market crashed following the terrorist attacks of Sept. 11, 2001.

The market has since rebounded and then some but it must be pointed out that infrastructure catering to tourism remains weak or non-existent – a lack of translated signage, cultural centre and tourism centre – and costs for tourists are increasing, hotel tax notwithstanding.

The airport improvement fee approved by MLAs last year caused ticket prices to increase by up to $29. Meanwhile, the tourism centre remains firmly planted in the bowels of city hall while the GNWT ponders what to do with the old building, currently sinking into a swamp.

There is a definitely sense the territorial government plans to low ball tourism investment and save a buck while the going is good but what’s going to happen a few years down the road when diamond mines begin closing and Yellowknife and the territory really need the tourism dollars?

The city needs a proper tourism centre, it needs Mandarin signage and a facility celebrating Dene culture downtown. It needs GNWT dollars to help with this.

Faced with a potential strike by its workforce over wage increases, the GNWT is in a tough spot. But the situation will not get any easier once flow of diamond dollars begins to stop. We better hope the tourism dollars don’t stop either.