The Newfoundland and Labrador government has been called upon to mediate a tax dispute between an upscale hotel and the town of Fogo Island.
Shorefast, the operator of the Fogo Island Inn and a major employer on the island, refuses to pay part of its municipal tax bill for the first 16 months of the pandemic.
“The part of our bill that we dispute is the $57,000 in business taxes (from 2020 to June 2021) when the hostel was forcibly closed due to the government-imposed travel ban cutting us off from our customers, 96% of whom are from outside Atlantic Canada,” read a letter sent to residents of Fogo Island this week.
“During our 16 months of closure, however, the hostel and Shorefast incurred millions of dollars in debt so that we could emerge from the pandemic in good standing, get our entire team back to work and resume operations.”
Shorefast’s letter states that in December 2020, the City of Fogo Island proposed waiving business taxes for businesses that remained closed year-round due to the pandemic.
“Shorefast applied, on the grounds that the hostel was only open 38 days at the start of 2020 during the lowest part of our season and ended the year in a position of significant financial loss, but demand has been denied,” he said.
The water is almost cut off
Fogo Island Mayor Andrew Shea told CBC/Radio-Canada that the city considered cutting off the water supply to the hotel due to the unpaid tax bill, but ultimately decided against it. To do.
“It was in the works, but we didn’t,” Shea said Friday, before declining further comment.
Radio-Canada obtained a copy of Shorefast’s letter on Friday. The city’s administrative manager, Pauline Payne, declined an interview, but confirmed that the Ministry of Municipal Affairs was negotiating the dispute.
Settlement reached on $200,000 in other taxes, fees
Shorefast and the city had previously agreed to a 15-month payment plan for approximately $200,000 in “undisputed” property taxes and water and sewer charges owed since the pandemic began, according to the letter from the l ‘business.
The two-page document, sent to residents to ‘demonstrate the impact of our work’, says the money the hotel earns after paying its running costs is plowed back into the community through its charitable and development work economic.
Shorefast says it has paid $700,000 in taxes to the city since 2011. The company also says it directly employed 255 residents in 2019, the last year before the pandemic. That year, she paid $5.8 million in salaries.
About 2,300 people live on Fogo Island.
The Fogo Island Inn, built by millionaire Zita Cobb, has hosted the rich and famous, including movie stars like Gwyneth Paltrow — since its opening in 2013 with a mandate to revitalize the local economy.
According to the hotel’s website, the cheapest room costs $2,575 per night. The Fogo Island Sunrise and Sunset Suites are $5,075 per night, while the Flat Earth Premier Suite price is available upon request.
Shorefast vice president of operations Susan Cull did not respond to email and phone requests for comment on the tax dispute. The company’s letter encourages residents to contact Cull with questions and comments.
In an emailed statement, the company’s vice president of marketing, Sorya Gaulin, said: “The matter is ongoing, so we will not comment on it beyond the newsletter issued earlier this week. .”