Tourism Vancouver pushing to extend hotel tax to Airbnb
In a Canadian first, Tourism Vancouver officials are pushing to extend a tax increase on hotel rooms to the customers of the popular rental website Airbnb.
The San-Francisco-based company – which offers access to more than a million private homes whether or not local laws allow it – says it’s happy to help collect any taxes if a deal can be struck.
“We’ve had regular discussions with Airbnb. We believe they should come into the mix,” said Ty Speer, the president of Tourism Vancouver, which uses dollars collected through provincial taxes to promote Vancouver abroad.
There are around 3,500 suites for rent in the City of Vancouver on Airbnb, according to research by Simon Fraser University grad student Karen Sawatzky.
By comparison, there are around 14,000 hotel rooms. On Sept. 1, tax on those hotel rooms went up from two per cent to three per cent. An estimated $16 million will be collected by the province and sent to Tourism Vancouver.
To put that in perspective, the site is popular enough that for every four hotel rooms, there is one Airbnb rental suite, mostly concentrated in the downtown core and near False Creek. But it’s unlikely that Tourism Vancouver will see any revenue from those properties, even though they benefit from the agency’s intiatives.
Right now, anyone who has revenue from rentals on Airbnb is expected to pay income taxes on that revenue, although it’s not clear how many actually do.
And technically, anyone who rents four or more suites should be paying B.C.’s hotel tax as well, according to the province's Ministry of Finance, which said it had no information on how much money was being collected. There are many owners with multiple listings – some 1,215 listings are in the hands of just 381 hosts.
Airbnb says it’s happy to help its customers remit taxes as part of its Shared City initiative.
Any agreement would be similar to deals in a handful of jurisdictions worldwide, including Portland, Amsterdam, Paris and the country of India. Renters would see a line item on their bill, and Airbnb would send that money directly to the government.
“We’ve been having positive and productive conversations with community leaders in Vancouver and we’re looking forward to expanding this program,” said Airbnb spokesman Nick Papas.
However one sticking point is that right now, the City of Vancouver doesn’t licence any Airbnb properties. And Speer says he doesn’t want to proceed unless Vancouver gives the go-ahead.
“There is not currently any existing regulation in Vancouver and we would love to see that happen,” he said.
NDP critic David Eby said any hotel tax increase is not about collecting more money for tourism – it’s really about paying off the outstanding debt that Tourism Vancouver has left from its share of building the Vancouver Convention Centre.
In 2009, that debt was only $90 million. Despite millions in payments that debt has risen to $112 million in 2014.
Eby says that’s because the province is charging Tourism Vancouver a 6.1 per cent interest rate, even though it’s borrowed the money at four per cent.
“This is a tax that goes towards general revenue,” he said, rather than allowing Tourism Vancouver to do its job.
“There was a New Year’s Eve celebration in Vancouver last year. Organizers were short $100,000. Tourism Vancouver could have stepped in and provided that funding. Unfortunately they were spending $3.1 million paying down this debt, and it continued to grow anyway.”
It’s not clear how much money could be made by extending these taxes to Airbnb properties, or whether it would help Tourism Vancouver out of this fiscal crunch.
But it’s something the provincial government is looking at exploring.
“Working with Airbnb to streamline occupancy tax collection of behalf of hosts is one option the province may consider in the future,” said a statement from the B.C. Ministry of Finance.