Ontario Hospitality Industry Pushes for Staycation Tax Credit Amid U.S. Tariff Concerns

As U.S. tariffs have many Canadians reconsidering their travel plans to the United States, Ontario's hospitality sector is urging the provincial government to bring back a tax credit that was introduced during the pandemic. This credit is aimed at encouraging Ontarians to take vacations closer to home.

Industry Calls for Support from Provincial Government

The Ontario hospitality industry believes that reinstating the staycation tax credit would inspire residents to explore local attractions and help offset the financial impacts of U.S. tariffs. According to data from U.S. Customs and Border Protection, there were nearly 500,000 fewer trips from Canada to the U.S. in February compared to the previous year.

The original staycation tax credit, implemented in 2022, was crafted to aid the tourism, hospitality, and culture sectors impacted by the pandemic. It allowed a 20 percent refund on accommodation expenses, with a limit of $1,000 per person or $2,000 per family.

As Canadian travelers pivot away from American destinations, the Ontario Restaurant, Hotel and Motel Association (ORHMA) sent a letter to Premier Doug Ford and other officials emphasizing the need to restore this credit. They claim it would not only boost local tourism but also deliver substantial benefits to businesses and residents currently facing economic challenges.

Statistical Insights and Economic Implications

According to a spokesperson from the tourism ministry, the previous tax credit provided around $180 million in return for over 900,000 families. Despite the advocacy from the hospitality sector, the provincial government has been hesitant to confirm whether the tax credit will be reinstated, stating they will continue to assess the situation surrounding tariffs and their effects on local tourism.

Jasveen Rattan, ORHMA's director of policy and government relations, stressed the importance of creating incentives for domestic travel. She noted that as budgets tighten, individuals may reconsider their expenditures, and vacations are often the first luxury items to be cut from the budget.

In response to the reduced travel to the U.S., Flight Centre reported a significant 40 percent drop in leisure bookings for American destinations in February compared to last year. Despite the decline in international travel, many Ontario hotels are also experiencing reduced bookings and increased cancellations, which compounds their economic hardship.

The Importance of Domestic Tourism

Andrew Weir, president and CEO of Destination Toronto, affirmed the fundamental role of domestic travelers in the near future, highlighting that the local traveler will be increasingly vital for the economy. The City of Toronto, under Mayor Olivia Chow’s leadership, has unveiled initiatives designed to support local businesses through the ongoing trade issues, including tax relief for industrial properties and a campaign promoting local products and services.

Aileen Heatherington, general manager of the Drake Hotel, shared her perspective on the significance of the staycation tax credit, stating that it could encourage more spending within the community and bolster local businesses. She noted that as the summer season approaches, leveraging this opportunity could lead to positive outcomes for the hospitality sector.

Ontario, tourism, tax