Ontario's hospitality industry seeks staycation tax credit revival

Ontario's hospitality industry is urging the provincial government to bring back a tax credit designed to encourage locals to take vacations within the province. This request comes as U.S. tariffs lead many Canadians to reconsider traveling to the United States. The original staycation tax credit was introduced in 2022 during the pandemic. It provided a 20% rebate on accommodation costs, with a maximum of $1,000 per person or $2,000 per family. Recently, there was a significant drop in cross-border trips to the U.S., with about 500,000 fewer Canadian trips recorded in February compared to the previous year. The Ontario Restaurant, Hotel and Motel Association (ORHMA) submitted a letter to Premier Doug Ford and other officials, stressing the benefits of reinstating the tax credit. They believe it would help Ontario businesses and workers during uncertain economic times. In 2022, the program helped over 900,000 families and injected around $180 million into the economy. However, the province has not committed to making the tax credit permanent. A tourism ministry spokesperson indicated that the government will monitor the impact of tariffs. Industry representatives like Jasveen Rattan from ORHMA highlighted that many Ontarians are cutting back on expenses, which could hinder travel plans. Flight Centre reported a 40% decrease in U.S. travel bookings in February compared to last year, with travelers increasingly opting for alternative destinations. Hotels in Ontario have experienced a decline in bookings since the onset of trade issues. Rattan emphasized the need for a staycation tax credit to boost local tourism and support businesses reliant on visitor spending. Even in major urban areas like Toronto, local travelers are becoming increasingly vital for the economy. Andrew Weir from Destination Toronto noted the importance of domestic travelers in the coming year. Toronto's Mayor, Olivia Chow, recently announced initiatives to assist local businesses during the trade tension, including a tax deferral program and a campaign to encourage residents to support local products and services. Business owners, like Aileen Heatherington from the Drake Hotel, are hopeful that reinstating the staycation tax credit could positively impact the economy and local businesses during challenging times.