Will B.C.'s Airbnb tax make tourists turn to tax-free alternatives?

As a new tax on Airbnb rentals in B.C. inches closer, there are concerns that the 11 per cent levy will make travellers choose tax-free vacation rental services.

‘It's obviously a concern long term for us,’ says Airbnb

'We will be collecting and remitting these taxes and if our competitors don’t do it, it's obviously a concern, long-term for us,' said Airbnb. (Airbnb)

As a new tax on Airbnb rentals in B.C. inches closer, there are concerns that the 11 per cent levy will make travellers turn to tax-free alternatives.

There are no plans currently in place for other vacation rental companies — such as VRBO, Home Away, Tripadvisor and Expedia — to collect taxes from guests and remit those funds to the B.C. government.

That's a worry for Airbnb and hosts such as Mary Thomson, who advertises her beach cottage just outside Gibsons, B.C., on the website.

The breathtaking views, direct access to the ocean and five-star reviews make Thomson's property a popular one — but she worries it might not be for much longer.

"I'm quite sure that that business could go to VRBO, as the consumer is looking for the best deal," Thomson said. "And on the Sunshine Coast, [VRBO] is a very popular platform."

'Stay taxes'

Last week, the B.C. government and Airbnb announced that legislation will be introduced to allow Airbnb to collect and remit 11 per cent of the cost of every short term stay, with most of the funds being directed toward affordable housing.

"We will be collecting and remitting these taxes," said Alex Dagg, Airbnb's public policy manager. "And if our competitors don't do it, it's obviously a concern long term for us."

Mary Thomson's Airbnb listing is so popular, bookings have already been made through to October 2018. (Airbnb)

Home Away, VRBO's parent company, shows "stay taxes" — for example, occupancy tax, tourist tax and hotel tax — are collected in 17 jurisdictions in the U.S. and 47 in France.

The website says "owners remain responsible for understanding their tax obligation."

Airbnb has agreements in place with more than 350 jurisdictions worldwide.

In August, Airbnb and the Quebec government announced an agreement to charge hosts a 3.5 per cent lodging tax. 

VRBO has no formal tax collection system in place in Quebec.

"They need to come to the table, they need to match us, and contribute to the economy that benefits the citizens as well," said Dagg about the other vacation rental providers.

Requirement or option?

During last Wednesday's announcement, finance minister Carole James said she expects other home-sharing companies will come on board and become "part of our tax system."

"Once that [new legislation] passes, then there will be the requirement for other organizations to also make sure their providers are paying their taxes," said James.

CBC News contacted the minister's office and asked for clarity on whether remittance of the 11 per cent tax was a requirement or an option for VRBO.

"We really appreciate Airbnb coming to the table. The province is working to reach similar remittance arrangements with other online accommodation providers," the minister responded in a written statement.

Home Away didn't respond to interview requests.

Thomson says she's a loyal host and supporter of Airbnb. But she and the other 18,500 hosts in B.C. have options.

"As hosts, we can advertise on different platforms, we could advertise on both of those," said Thomson. "It's up to the consumer at that point to choose."

About the Author

Cathy Kearney

Cathy Kearney is a digital journalist with CBC News Vancouver. @CBCcathykearney

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