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The 14-month increase in the levy from six per cent to 8.5 per cent would start next June and is expected to generate almost $57 million in additional revenue for the city.ÌýÌý

However, even with the funding injection, º£½ÇÉçÇø¹ÙÍøwould still be almost $40 million short of what it needs to host the tournament, after the federal and provincial governments left it on the hook for nearly half the event’s costs.ÌýÌý

Speaking to reporters Monday, Mayor Olivia Chow said raising the accommodation tax was fair because the tourism sector will directly benefit from the World Cup, and “property tax payers should not be shouldering all the cost.”  

Despite hotels being hit hard by the pandemic, the mayor said they’re now doing well, and pointed out that many are instituting surge pricing when Taylor Swift’s Eras Tour comes to town next month. In that case, the city is taking on additional costs in the form of increased traffic management and policing, and isn’t charging hotels extra, but “they will do very well with the World Cup and we’re asking them to support us,” Chow said.

According to the report, the 2.5 percentage points tacked on to the levy will cost visitors an additional $3.42 per night, on an average daily room rate of $228. Staff predict the “competitive impacts” of the higher rate will be “minimal.” 

But Sara Anghel, president and CEO of the Greater º£½ÇÉçÇø¹ÙÍøHotel Association, said in a statement her organization is “extremely concerned” about Toronto’s plan for a “FIFA fee.” She warned the proposed increase “threatens Toronto’s competitiveness as a destination and the region’s overall economic success.” 

Anghel said the city already made hotel and motel stays more expensive last year when it increased its accommodation tax from four to six per cent.  At the time the hotel industry was told the hike would help pay for events like the World Cup “yet we are now seeing an additional increase for this exact purpose,” she said.

A spokesperson for Airbnb, whose operations would also be affected by the tax increase, declined a request for comment Monday. 

It’s expected to cost º£½ÇÉçÇø¹ÙÍø$380 million to be one of the 16 host cities of the next World Cup, which is being held in Canada, the U.S. and Mexico. The province has pledged up to $97 million towards the cost, while the federal government is contributing more than $104 million, leaving º£½ÇÉçÇø¹ÙÍøresponsible for the remaining $178 million, or just under half the total. 

The municipality has found funding for almost $84 million of its share, which still leaves a gap of about $95 million. The incremental revenue from the accommodation tax increase would cover more than half the shortfall.

Although the tournament is expected to attract more than 208,000 overnight visitors and give º£½ÇÉçÇø¹ÙÍøan economic boost, the municipality’s limited taxation powers means it has few options to capture revenue from the flurry of spending, according to the report. The provincial and federal governments, which levy sales and income taxes, will get the lion’s share of tax proceeds.

The accommodation tax “provides the most effective opportunity to generate revenue directly from increased economic activity” spurred by the event, “while ensuring no impact to the city’s property tax base,” the report concluded.

Vancouver, the only other Canadian host city, is also increasing its hotel tax to pay for the World Cup, but in its case the higher rate will be in place for seven years. 

º£½ÇÉçÇø¹ÙÍøis still trying to find more revenue sources to make up its remaining World Cup funding gap, which after the hotel tax hike would sit at about $38.5 million. Donations secured through its World Cup Champions Table, cuts of merchandise sales and music royalties, and proceeds from the tournament’s Fan Festival are among the options being explored. Staff intend to report back on further funding plans before the games begin. 

If approved by the World Cup subcommittee next Monday, the report’s recommendations will go to council for a final decision.