Airbnb to collect provincial, municipal taxes on short-term rentals in B.C.

B.C. and Airbnb have reached an agreement that will see the online short-term rental company collect provincial and municipal taxes through its platform.

Tax of up to 11 per cent on all rentals will help fund housing affordability, tourism

Airbnb and the British Columbia government are set to make an announcement Wednesday that will "that will help fund affordable housing" throughout the province. (Airbnb)

B.C. and Airbnb have reached an agreement that will see the online short-term rental company collect provincial and municipal taxes through its platform.

Minister of Finance Carole James says the move will help fund housing affordability measures for B.C.

"British Columbians want access to the sharing economy — and they want it to be fair," said James.

"This initiative will provide additional revenues to address housing affordability and it improves tax fairness for all British Columbians."

Airbnb will be collecting the eight per cent provincial sales tax — amounting to an estimated $16 million annually, which government will earmark for affordable housing — and up to three per cent municipal and regional district tax, an estimated $5 million, which will go toward promoting tourism.

"It's a very small step when it comes to housing," admitted James. "Today really is a tax announcement. It's about a more fair system."

Last year, Quebec announced a province-wide 3.5 per cent Airbnb tax, which the company collects and gives to the province on every rental, with the money raised funding the province's 22 regional tourism offices.

But this is the first time Airbnb has reached an agreement with a province on remitting PST.

"This is a defining moment for Airbnb and more than 18,000 hosts across the province," said Alex Dagg, the company's public policy manager in Canada.

​B.C. will be moving toward similar agreements with other accommodation platforms like VRBO in the near future.

Cities can still regulate

Karen Sawatzky, a researcher who has studied the effects of short-term rental properties in Vancouver, said the announcement would help create a more level playing field between Airbnb and hotel operators. 

"I think this is mostly a good-news story for the tourism industry, and it's fair ... it's reasonable they should pay these taxes, because tourists come and have an impact on our services," she said.

But Sawatsky said while it would raise revenue, it wouldn't have a large impact on the stock of affordable housing — with the money raised equivalent to about 40-50 new units in Vancouver or Richmond — and that it was up to cities to also regulate short-term rentals.

"It's kind of two different strings. It's good that the provincial tax that we collect through this will go to affordable housing, but we need to be protecting our existing rental stock from conversions," she said. 

Some cities, including Victoria and Vancouver, have instituted their own regulations, forcing people posting properties on sites like Airbnb to pay an annual licence, with fines for people who don't comply.

Green Party Leader Andrew Weaver said other cities should do the same. 

"While this announcement is a good first step from a tax fairness perspective, it will not change behaviour or free up long-term rental stock that has been taken out of the market due to short-term rental services," he said in a statement.

"We are in a crisis — we need to ensure that houses are used for homes for British Columbians first and foremost."