British Columbia

It's more important to regulate Airbnb than to tax it, says short-term rental researcher

The chair of Vancouver's Renters Advisory Committee says that while new provincial Airbnb taxes will generate some income to address B.C.'s affordability crisis, what's really needed is more regulations on the businesses themselves.

As the sharing economy grows, the government needs to find a way to regulate it

Online businesses like Airbnb can be notoriously hard to regulate says Karen Sawatzky, the chair of Vancouver's Renters Advisory Committee. (Darryl Dyck/The Canadian Press)

It's more regulations, not new taxes, that will solve B.C.'s housing crisis says short-term rental researcher Karen Sawatzky.

Sawatzky has extensively studied the effects of short-term rentals and is the chair of the City of Vancouver's Renters Advisory Committee. 

She says the provincial government's recent agreement with Airbnb — that will see the online short-term rental company collect provincial and municipal taxes through its platform — levels the playing field for hotels but doesn't do much else.

"It's a tax fairness issue that definitely needed to be corrected," said Sawatzky. "So that's good. But it doesn't really address the housing issue."

Inequity fix

Sawatzky said various accommodation providers have long been pointing to the inequity that existed by allowing Airbnb to operate without paying taxes.

But the new eight per cent provincial sales tax for Airbnb — which the government expects will generate $16 million annually and will be directed toward affordable housing — will only pay for a drop in the bucket of the housing shortage issue, she said.

Sawatzky referenced research done by the B.C. Rental Housing Coalition during the lead-up to last year's provincial election. The coalition's analysts determined $1.8 billion would be required to provide adequate housing to all British Columbians

"We are desperately in need of funds for affordable housing, so every little bit helps," said Sawatzky. "This is going to be an annual source, so it'll help a little bit."

However $16 million a year falls short of the $1.8 billion estimate and won't realistically address the time-sensitive issue of people not being able to afford a home in the province, she said.

In addition to the new Airbnb taxes, Sawatzky recommended that the province find a way to hold Airbnb and similar online businesses accountable for their practices.

From her research, Sawatzky found it is notoriously difficult for local governments to regulate the businesses themselves, rather than the hosts that use their services.

The hosts often fall within a government's jurisdiction, and licences and taxes can be incorporated into the service, but businesses like Airbnb that have their headquarters in other jurisdictions pose a problem that will only grow along with the sharing economy, she said.

"It's one thing to fine the hosts if they don't get a licence in a jurisdiction where a licence is required. But the platforms are still making money," said Sawatzky.

"How do we hold the corporations themselves accountable for that, rather than just the hosts?"

Furthermore, Sawatzky recommended a review and strengthening of B.C.'s Residential Tenancy Act to keep it up to date with the growing Airbnb trend.

With files from The Early Edition