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MODL Flirts with Short Term Rental Tax

(Illustration: Jessie McLaughlin)

The Municipality of the District of Lunenburg (MODL) is gearing up to introduce a marketing levy this spring, aiming to generate revenue dedicated to promoting shoulder season tourism.

This proposed bylaw follows a significant amendment to the Municipal Government Act in 2022, granting municipalities the authority to implement a marketing levy on accommodations, capped at a maximum rate of 3 per cent. 

Prior to this amendment, municipalities relied on provincial legislation to enact such measures, with Halifax Regional Municipality, Yarmouth, and Cape Breton Island already having provincial approval for their marketing levies.

MODL announced its intention to pursue a marketing levy in November 2023 set at 3 per cent. The levy targets hotels, motels, and short-term rentals like Airbnb, with operators mandated to collect the levy directly from guests. Exemptions to the levy include medical stays, institution-owned student housing, and stays exceeding 30 consecutive days.

Some operators of short-term accommodation say their concerns about the by-law aren’t being heard by the municipality. 

Heidi Mead, who operates an Airbnb out of her primary residence near the LaHave River says, “There has been no consultation or discussion. It’s pretty upsetting for us as a small operator who started in 2016 […] I think that it should be a different case for people who have just a small unit that is actually a part of their house compared to people who own several properties.”

Cape Breton Island had similar dissent when first trying to pass a marketing levy in 2005. The bill was passed in October of that year but not proclaimed into law due to mass opposition from tourism operators on the island. It took five years of consultation with industry and significant changes to the original bill, including exempting properties with less than 10 rooms, for the levy to be implemented. 

If passed, the bylaw could come into effect as early as April. The municipality is considering pushing back the implementation date.

Some owners and operators are also concerned about enforcement and compliance with the bylaw. 

In an email to MODL voicing concerns about the method of compliance, Frauke Wenzel, Owner of River Ridge Lodge, writes: “We believe this section conflicts with our right to privacy and raises concerns about the proper handling of sensitive information.” The by-law would allow an inspector to access the records on-site “at any reasonable time”.

In a January 24 update on the proposed by-law, MODL has said they will “provide more stakeholder engagement opportunities to continue to gather more feedback and input.”

There were 391 AirBNBs operating in MODL in August 2023 according to AirDNA, with an average daily rate of $289. The 3 per cent levy would add less than $10/night to the average AirBNB rental.

MODL had previously explored a marketing levy in early 2018, in conjunction with surrounding municipalities. 

Bridgewater Town Council has directed staff to draft a marketing levy by-law for anticipated review in the spring. Mahone Bay is not pursuing a marketing levy in 2024.


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