It is Fox Creek versus the hospitality industry, and local municipalities are not on Fox Creekís side.
The Village of Boyle and the Town of Athabasca said they would not support the Town of Fox Creek as it prepares to go up against the Alberta Hotels and Lodging Association over a controversial bylaw allowing the town to collect a four-per-cent room fee from local hotels and motels.
ìThatís a typical municipal government ñ clueless, brain dead, retired school teacher thinking ñ somebody whoís never had to work or run a business,î said Village of Boyle Coun. Don Radmanovich. ìThe reason Iím against this myself, (is because when) you give the municipality the power to start taxing and throwing levies at motels, whatís next?î
The next thing you know, Radmanovich said, the municipality would be charging a levy for every paint can sold at Home Hardware or Co-op.
The levy was a move by Town of Fox Creek town council to deal with its rapidly booming economy as fracking and oil extraction brought droves of workers to the area. As the population went up, so did hotels and a zero vacancy rate, putting downward pressure on infrastructure needs and demands.
Last year, on April 27, council passed a bylaw that would tax local hotels four per cent for every room they booked, instead of charging the usual $75 business license.
Fox Creek Mayor Jim Ahn explained in letter to some Alberta municipalities that the bylaw was preceded by consultations with the town solicitor advising council that the legislation could face a court challenge.
After the bylawís third and final reading, the Alberta Hotel And Lodging Association (AHLA) issued a letter against the tax. The local hotels and motels have also refused to pay it.
The AHLA filed a legal challenge against the town in November.
ìWe are working with our members across the province to help fund the challenge,î said Dave Kaiser, AHLA president and CEO. ìThe reason for that is that we see this as potentially the tip of the iceberg. If this were allowed to go through, there would be many communities that would be implementing this tomorrow because itís potentially a substantial amount of revenue.î
He added that the issue should be concerning to the province because it amounts to an $80-million sales tax on an industry ñ if it were implemented province wide.
ìIt could be potentially applied to any business if this was allowed to stand, because whatís to stop a similar bylaw being imposed on a gas station or restaurant or anything else? We think itís a represents a very dangerous precedent.î
Now Fox Creek is readying itself for a court battle and is asking municipalities across the province to support its cause.
Village of Boyle
The Village of Boyle unanimously passed a motion at its last council meeting on April 6 to decline their support for the cause.
ìIn a way, what the hotel association is saying is that itís almost like an income tax, because you want four per cent of our gross revenue,î noted Boyleís chief administrative officer Charlie Ashbey.
He called the move opportunistic, since a zero-vacancy rate would likely mean the hotelís assessment would reflect that with higher taxes.
While he criticized the move, he pointed out that Albertaís four-per-cent Tourism Levy is perfectly legal.
ìWe have not adopted it here (in Boyle), but if you go to Edmonton and look at your hotel statement, youíll see the four per cent,î he said.
The Tourism Levy applies to the purchase price of accommodation ñ not including meals ñ whenever four or more bedrooms are separately available for rent, at the same time and location.
The levy has been in effect since 2005, when it replaced a five-per-cent hotel room tax rate that was implemented from 2000 to 2005.
Town of Athabasca
Town of Athabasca councillors indicated they were hesitant to comment on a case before the courts at their council meeting on April 5.
ìI donít think that we should be taking a legal position on this particular tax,î said Coun. Nichole Adams.
ìTheyíre asking for, basically, just letters of support to try to convince the court that municipalities can, in fact, tax a specific revenue stream for the hotel and hospitality industry. Iím uncomfortable with it because they could have structured their business license so many other ways.î
Chief administrative officer Josh Pyrcz offered his two cents on the situation before council voted unanimously to file Fox Creekís letter for information.
ìWhat the Town of Fox Creek has done here, in my opinion as an administrator, is tried to circumvent the other options available to them such as the Destination Marketing Fee (DMF),î Pyrcz said.
ìFor anyone who has stayed in Edmonton or Calgary or Red Deer or Lethbridge, you will see the DMF fee applied to your room bill, so therefore it is not a tax on the revenue of the hotel or motel as they say in here.î
DMFs are similar to the Alberta Tourism Levy, but are collected on a voluntary basis and are not legislated by the provincial government.
