Toronto could hike hotel tax to help pay for FIFA World Cup costs

It could soon cost a little more to stay in a Toronto hotel as the city is now considering a temporary hike to its Municipal Accommodation Tax as a way of helping to offset the cost of hosting the FIFA World Cup.

The cost of hosting six World Cup matches in Toronto in 2026 is pegged at $380 million but approximately $201 million of that is coming from the provincial and federal governments.

City staff say that they have already identified about $83.6 million in revenue from existing sources, including commercial right sales, rental fees and in-kind contributions.

However, that would still leave an approximately $95 million shortfall.

In a report that will go before city council’s FIFA World Cup committee next week, staff recommend that the existing tax on overnight hotel stays and short-term rentals be increased from six per cent to 8.5 per cent between June 1, 2025 and July 31, 2026.

Doing so, staff say, would generate an additional $56.1 million in revenue which would help to offset the majority of the remaining shortfall.

“It is anticipated that any potential impacts on hospitality operators will be largely offset by increased room demand and related visitor spending in the lead up, during, and following the FIFA World Cup 2026, as well as substantial future benefits due to Toronto’s global visibility gained from hosting the FIFA World Cup,” the report states.

The estimated cost of hosting World Cup games in the city has risen by approximately $80 million since Toronto was first named as one of 15 host sites back in 2022.

While some members of city council have criticized the rising costs, others have suggested that the estimated $392 million in economic impact from the event as well as the increased visibility for the city will make the investment worthwhile.

Staff were previously asked to study a variety of revenue tools that could be used to help offset the cost of hosting the World Cup.

But in the report, staff say that hiking the hotel tax “provides the most effective opportunity to generate revenue directly from increased economic activity resulting from the FIFA World Cup” without impacting taxpayers.

Staff say that they also continue to review the budgets associated with hosting the World Cup and have identified approximately $4.8 million in savings to date.