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Whistler proposes new tax class for strata-hotels

Tax uncertainty impacts resort business, municipal revenue said Nelson

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Despite these concerns, the one class proposal could put an end to the costly and time consuming appeals which go through the system every year as property owners attempt to get reclassified in the lower, Class 1, tax bracket.

Nelson said the discrepancy essentially creates an un-level playing field in Whistler, which goes against the two basic principles of tax policy, namely fairness and certainty.

"As far as Whistler goes as a tourism business, certainly the uncertainty for the investor hurts," he added.

"We’ve got the unfairness when one property pays more than another property in taxes."

This uncertainty in the taxation structure sends warning flags to potential investors, according to Kelly, who’s dealing with customers on the front lines.

"For an investor, he doesn’t want to have uncertainty in his purchase decision and certainly if you were looking at a building that the municipality feels should be commercially taxed right now and isn’t, yeah, he’d be a little concerned about it," said Kelly.

"Nobody wants to pay more taxes than they have to."

The tax dispute also has ramifications for the visitor in the resort.

Nelson explained that one way properties may get into the residential (Class 1) tax bracket is by having two or more property management companies in the same building. But only one property management company can operate the front desk of the building.

"We’ve got poor visitor experience because this is what causes the fractional management system where two people can be checking into rooms on opposite sides of a hallway and one is handled by one management company, the other may have to go across town to pick up their towels because they’re managed by another company," he said.

There’s also uncertainty for the municipality.

Every year, with appeals and reclassifications going on, the municipality’s tax revenue can fluctuate by hundreds of thousands of dollars.

"As far as municipal revenue goes and what funds we have to provide our municipal programs, we also can see some big swings in our tax revenues each year," said Nelson.

"And these, over the last five or six years, have ranged from a difference of $200,000 to a difference of $800,000."

But it’s not just a Whistler problem. Other resort towns are facing similar challenges.

Tofino, for example, recently had one property apply to council to stratify. Council rejected the application for a number of reasons, one of which was the tax issue, because as a strata hotel the property could apply for a Class 1 tax rate.

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