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Penticton tourism tax fight ends with court decision; taxpayers the losers

Image Credit: File Photo
August 01, 2014 - 7:44 AM

PENTICTON -  A legal battle involving the roughly $400,000 raised by the hotel room tax in Penticton may have come to a close.

A B.C. Supreme Court judge has dismissed the City of Penticton’s case against the Penticton Hospitality Association.

Mayor Garry Litke calls the decision a little disappointing.

“We (council) thought we had an obligation to be fiscally responsible with taxpayers’ money,” Litke says. “We didn’t have confidence with the PHA ‘s standard of accounting.”

The city alleged the association had mishandled the money collected by the hotel room tax which is earmarked for marketing so took them to court alleging breach of contract.

The judge disagreed.

Litke says the judge felt the matters around the dispute were not a fundamental breach of the contract.

Almost $42,000 of taxpayers’ money was spent on legal fees and the mayor feels spending it was fiscally responsible.

“Considering the amount of money we’re talking about yes. That’s a ten per cent investment in trying to be accountable for the $400,000.”

“It (decision) tells you also that you should make every effort to negotiate and patch up relationships rather than go to the courts because you never know what the courts are going to say," the mayor adds.

The city isn’t on the hook for the association’s legal costs.

The tourism marketing body lost control of the annual funding back on Oct. 31, 2013.

When the city declared it would transfer control of the two per cent hotel room tax to a different group, Tourism Penticton, the Hospitality Association lawyered-up.

Negotiations between the city and the association broke off in January with the dispute moving to the courtroom.

City council still wants to see one tourism association handling the marketing for Penticton. Although Litke says they’d be happy if the two groups just worked together.

“It doesn’t make sense to be duplicating a tourism strategy.”

There are 3 years left in the association’s 5 year contract.

It will be up to the accomodators, the hotel and motel owners who have agreed to the collection of the two per cent room tax, to decide whether or not to renew the contract.

To contact the reporter for this story, email Howard Alexander at or call 250-491-0331. To contact the editor, email or call 250-718-2724.

News from © InfoTel News Ltd, 2014
InfoTel News Ltd

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