The tax man is about to knock on the doors of B.C.’s short-term rentals.
Airbnb will start charging an eight per cent provincial sales tax (PST) on top of an up to three per cent municipal and regional district tax, the provincial government announced Wednesday.
Coverage of Airbnb on Globalnews.ca:
“The sharing economy is here. We as governments need to look at the arrangements in place. We need to make sure we create that level playing field,” said B.C. Finance Minister Carole James.
“We have said this is the reality for companies who are doing their work on platforms that are outside our province and outside our tax jurisdiction but want to be responsible and contribute to the tax system as others do in the hospitality sector.”
LISTEN: Where will the taxes raised by Airbnb go?
The agreement is the first of its kind in Canada, in which a short-term rental company works with a provincial government to collect and remit the PST.
If Airbnb had collected the PST in 2017, it would have brought an additional $16 million into provincial coffers. That’s money the B.C. government said will help to address housing affordability.
But there were no details on how that would happen on Wednesday.
“We will be coming forward with a comprehensive housing plan and you will see that as part of the budget. This really is a tax announcement today,” James said.
Airbnb is the only short-term rental company that has signed on to the tax agreement.
A legislative change is required to implement the tax. That’s expected to come in the spring.
LISTEN: Airbnb joins hotels as a taxable business
Short-term rental companies have been criticized for contributing to the lack of rental suites in communities like Vancouver, Victoria and Kelowna.
But the province is leaving the responsibility of cracking down on companies that don’t follow the rules to local governments.
“It is a municipal government’s responsibility to look at everything from regulations to zoning in communities to look at how they want to strengthen those,” James said.
“They are best suited to determine what works best in their communities.”
There are 18,000 Airbnb hosts in British Columbia. Alex Dagg, Airbnb’s public policy manager in Canada, said those hosts bring in about $8,000 annually and rent their accommodations an average of 54 nights per year.
Dagg said Airbnb is not clogging up the rental market and that it provides essential accommodation for the tourism industry.
“Those units aren’t ones that would be on the long term market,” said Dagg. “It is a chance to share where people live in order to stay in their homes.”