A Watson Lake hotel is taking the town to court, challenging the municipality’s authority to introduce an “accommodation levy” the hotel claims is just a tax by another name.
Big Horn Hotel & Tavern Inc. filed a petition to the Yukon Supreme Court on Nov. 5.
In it, the hotel alleges the levy is in fact a tax, and therefore something municipalities in the Yukon do not have jurisdiction to impose on short-term accommodations.
Watson Lake’s town council passed the levy in August, with mayor Cheryl O’Brien telling the News at the time that the money would not being going into general venue, but towards infrastructure that bring tourists in — maintaining trails and the Sign Post Forest, for example.
The levy applies to all rooms, including ones in hotels, motels and bed-and-breakfasts, rented for 30 nights or less, excluding people staying in town for medical appointments and staff housing. It’s scheduled to come into effect in January 2020 at a rate of three per cent of the cost of a room before taxes, before rising to four per cent in 2021 and five per cent from 2022 onwards.
Accommodation providers who do not collect the levy and give it to the town will be subject to fines.
In its petition, Big Horn argues that the levy “is not a service or user charge or fee” as there is no correlation between its collection and the use of any given service — for example, there’s no guarantee that someone staying in a hotel and paying the levy will, visit the Sign Post Forest or other infrastructure.
Under the Municipal Act, the petition continues, the town only has the jurisdiction to tax property and to impose a local improvement tax, and therefore stepped outside its power when implementing the accommodation levy.
Although not the point of the petition, Big Horn’s lawyer, Meagan Hannam, said the impact the levy will have on hotel room rates is of “significant concern” to the hotel, particularly because the town also raised utility rates last year.
She confirmed her client fears that increased room rates will mean decreased business.
“I think the suggestion that you have to stop in Watson Lake now is not as accurate as it used to be,” Hannam said. “With the improvement of the highway, people regularly drive … right through to Fort Nelson or go down the junction into B.C.
“I think the other thing to think about is Yukoners who … have a habit now of staying in hotels (when visiting Watson Lake) may start looking to stay with family and friends or other accommodations instead of staying at hotels.”
Hannam also said increased room rates in Watson Lake, which markets itself as the “gateway to the Yukon,” may have a larger impact on tourism — people thinking of driving to visit the territory may look up hotel rates for the town, their presumable first stop, and then nix the idea of visiting the Yukon altogether after seeing how expensive it would be.
Watson Lake’s chief administrative officer, Cam Lockwoood, said in an interview Nov. 14 that the town was aware of the petition. While he didn’t want to comment on its contents, he said discontent surrounding the accommodation levy is nothing new.
“There’s been lots of feedback from the hotel owners, that they don’t agree with the levy, and they’ve made that clear to the town,” he said.
The case has not yet been tested in court.
Contact Jackie Hong at jackie.hong@yukon-news.com