Toronto Mayor Olivia Chow has proposed a temporary increase to the city’s Municipal Accommodation Tax (MAT) as City Council debates measures to support Toronto’s booming tourism sector and offset costs associated with hosting major events like the FIFA World Cup.
Chow highlighted the record demand for hotel rooms during Taylor Swift’s six-concert stay in the city as evidence of the hotel industry’s resilience and profitability. “They are doing very well. Taylor Swift is in town. Wow. It’s now costing a lot of money to stay in a hotel,” Chow remarked. “So I would imagine that they are doing fine at this point.”
The proposal under consideration recommends raising the MAT from 6% to 8.5% between June 1, 2025, and July 31, 2026, coinciding with Toronto’s role as a host city for six FIFA World Cup matches. This temporary hike aims to generate an additional $56.6 million in revenue to cover Toronto’s $95.1 million share of the event’s estimated $380 million cost.
Revenue from the MAT currently supports Destination Toronto—the city’s tourism promotion agency—as well as critical municipal services such as transit and infrastructure. The proposed increase is expected to help cover FIFA’s stringent hosting requirements while enhancing Toronto’s global visibility and driving future tourism.
The Greater Toronto Hotel Association (GTHA) has pushed back against the proposed tax hike, noting that the MAT was already raised from 4% to 6% in 2023. In a letter to City Council, the association warned that further increases could jeopardize Toronto’s competitiveness as a destination for business events and tourism.
“The proposed MAT hike threatens jobs in the hospitality sector and beyond. It’s not just hotels: thousands of small businesses that rely on tourism—such as restaurants, retailers, and cultural institutions—will also suffer,” the letter stated. “This could lead to significant job losses at a time when we should be focusing on economic growth.”
GTHA also noted that the FIFA matches fall during the peak season for business events, raising concerns that high room rates and taxes could drive those events to other cities.
Chow dismissed claims that the move is rushed, emphasizing that discussions about the hotel industry “sharing the wealth” have been ongoing. She also pointed to the significant increase in hotel rates during the Swift concerts, with some downtown rooms exceeding $2,000 per night. “They’re doing well, but we need to make sure that they share their wealth,” she said, adding that Toronto’s vibrant downtown and cultural events will keep the city competitive.
Chow explained that the decision to delay the tax increase until 2025 was in response to the industry’s claims of financial recovery following the pandemic. However, she reiterated that the additional revenue will be crucial to promote Toronto and attract future events.
A city staff report projects that increased room demand and visitor spending during the FIFA World Cup will offset any potential negative impacts on hospitality operators. It also anticipates “substantial future benefits” from Toronto’s enhanced global visibility as a host city.
“And we believe that when the World Cup comes to the city, the hotels will also do very well, just as they’re doing well now during the Taylor Swift concerts,” Chow said.
The GTHA has urged the city to explore alternative solutions to address fiscal needs without compromising Toronto’s appeal to tourists and event organizers. “We urge the City to engage with our industry to develop alternative solutions that address fiscal needs without compromising our competitive edge,” the association stated.
As the city moves closer to implementing the tax hike, the debate underscores the delicate balance between leveraging Toronto’s thriving tourism economy and maintaining its reputation as an accessible and attractive destination for visitors and businesses alike.