When visiting Niagara Falls, if you look at your restaurant, hotel, or attraction bill you may notice a "Tourism Tax" line. This additional tax is up for debate as to if you actually have to pay it or not as it is not actually a government mandate; so what is it?
When it comes to legal taxes you do have to pay for Sales Tax & Provincial Tax (in Ontario these are rolled into one tax called HST), Accommodation Tax, Alcohol Tax, and sometimes other fees (ex. like a deposit on returnable drink containers). These fees are non-negotiable and have to be paid as they are either regulated by the province, the city, or the country.
While there are a few cities in Canada that do also charge a mandatory tourism fee, it actually goes to an independent governing body that makes sure the money goes back into promoting the city's tourism but in Niagara Falls this is not the case as the money goes into the business' pocket.
Since 2003 the Ontario government has allowed voluntary destination marketing fees in tourist communities and Niagara Falls has added a "Tourism Tax", "Tourism Improvement Fee (TIF)", "Niagara Falls Destination Fee (NFDF)", or "Destination Marketing Fee (DMF)" onto their bills, just below the HST line, but most companies are making this a mandatory fee, not voluntary. Some businesses took the "voluntary" part to mean that the business has the choice to charge it or not and if they decide to charge it then the customer has to pay it. This is due to the vague guidelines the city provided when the fee was approved.
In 2012, the government made the rules clearer and told businesses that they can keep charging the fee but they have to remove it upon request from the customer. This did not stop a lot of businesses as they put their foot down and still said that the fee was a voluntary decision on their part, not the customers.
As the province of Ontario made the fee voluntary this means that you can refuse to pay it but as some businesses have taken it upon themselves to make it mandatory, they would rather refuse you service than remove it. As there is no regulation, the business also decides how much the fee is with some being as high as 10%. The fee was even charged on free items (ex. free buffet at the casino) which really started to annoy people. Since the fee is such a nuisance some shops and restaurants are advertising in their windows that they do not charge the fee.
So what can you do? When it comes to booking a hotel or before sitting down to a meal, ask them if they charge the fee. If they do and they say it is mandatory then take your business elsewhere. If they do charge it and are willing to remove it then stay.
UPDATE: as of January 1, 2019 businesses have to remove the their "Tourism Tax", "Tourism Improvement Fee (TIF)", "Niagara Falls Destination Fee (NFDF)", or "Destination Marketing Fee (DMF)" as it is not a legal tax.
They can however charge a Municipal Hotel / Accommodations Tax of $2 per night which can only be charged on hotel rooms, Air Bnb's, and other forms of accommodation. (Hotels can also charge a resort fee or facility fee on top of this $2 per night fee. This is not a tax so the cost ranges from property to property.)
5% of the $2 fee will go to an independent council that will distribute the funds for tourism promotion. The fee will be in place for five years and after three years, studied to determine its effectiveness so it may increase or disappear all together by 2024.
This new council is also looking into if restaurant and other tourism businesses can charge a fee and if so, what type and how much.
