The City of Victoria is anticipating that the province’s new taxation on short-term rental industry leader Airbnb will level the playing field between businesses and help provide much needed housing.
“Essentially the regulations the province brought in today are making Airbnb pay taxes just like any other business. It’s making them play by the rules,” said Victoria Coun. Jeremy Loveday, council’s spokesperson on the issue.
B.C. Finance Minister Carole James echoed that statement at Wednesday’s announcement that her ministry has reached an arrangement with the home accommodation company that will enable it to collect provincial sales tax on all short-term rentals booked through its online platform. The decision is in line with the government’s move toward new tax models that help with tax fairness, she added.
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“This is about a fair playing field, especially in the hospitality industry,” James said.
Airbnb will begin collecting the eight-per-cent PST and up to three per cent in municipal and regional district taxes generated through the short-term accommodation its operators provide within the province.
To streamline this process, Airbnb will remit on behalf of its hosts in B.C., ensuring no additional administrative burden is placed on the operators.
Late last year the City of Victoria began to adjust its zoning regulations to prevent short-term rentals from springing up in and around downtown, as a way to help slow the removal of previously long-term rental suites for use as potentially higher-yield night-by-night rentals.
Even with the “welcome announcement” that funds will be collected to support the province’s housing affordability plans, Loveday said there was no expectation that the move would have any impact on the direction the City is moving in regulating short-term rentals through zoning bylaws and business licensing.
As for the affect on the end user, he said, “I’m sure that operators will just pass these costs on to their guests.”
“For the most part, the short-term rental operators that I’ve spoken to have said they want to comply with the rules and they want to be contributing businesses.”
James said with Airbnb becoming involved with a sharing agreement it will push other short-term rental companies to do the same.
“This is a defining moment for Airbnb in British Columbia,” said Alex Dagg, public policy manager for Airbnb in Canada. “These changes are a welcome opportunity to continue helping the province and its residents benefit from the positive economic impacts of home sharing.”
According to the B.C. government, if Airbnb contributed to this tax in 2017 they would have collected about $18 million. The company first began remitting taxes in Portland and is looking to do so in other areas.
Besides contributing to affordable housing, the tax money will also go toward promoting local tourism.
– with files from Jen Zielinski