Nfld. & Labrador

Bonavista cuts off services for Airbnb operators with unpaid business tax bills

The Town of Bonavista is getting tougher in its attempts to collect taxes from Airbnb operators as rental properties pop up in the popular Newfoundland and Labrador tourist destination. 

Town taxing Airbnb hosts as a business to try to level playing field with traditional hotels, B&Bs

Mayor John Norman says Bonavista, N.L., staff browse the internet daily looking for new Airbnb properties to make sure they are taxed accordingly. (Patrick Butler/CBC)

A Newfoundland town is getting tougher in its attempts to collect taxes from Airbnb rentals popping up in the popular tourist destination.

The mayor said Bonavista is taxing Airbnb property owners at the town's business rate, using properties' assessed values, to create a level playing field with owners of accommodations that are registered as businesses.

"They are not registered businesses so it's kind of hard to go after them when you don't know their revenue and the value of their business, so we have had to come up with our own formula," said John Norman.

We have gone to some pretty serious measures to collect.- John Norman

"We assign the business mill rate, like we do with any other business without knowing the actual revenue."

It appears to be a first for Airbnb, which says it is not aware of any other municipality in Canada that is taxing Airbnb hosts as a business based on their property assessment value.

Norman said there is a town staff member who monitors Airbnb consistently looking for new accommodations. When there are new listings, the information is recorded and a staff member will make a house visit.

"We have gone to some pretty serious measures to collect. We have literally dug up driveways and turned off water sewer service until the bill is paid, cutting them off completely from all municipal services."

The Town of Bonavista says it's trying to level the playing field between Airbnb operators and operators of more traditional hospitality accommodations. (Marie Isabelle Rochon/CBC)

The mayor said the taxation method has been successful, but he acknowledges not all Airbnb owners are pleased.

"I don't think some are happy about it, but it is what it is."

Airbnb property owners don't pay Canada Select Fees, site inspection fees for Service NL or provincial tourism registration fees, according to Norman, which he says is part of the reason owners of more traditional accommodations are upset. 

Unfair advantage, says bed and breakfast owner

Patrick Alan Monsigneur, co-owner of the Claddagh Inn, a Saint Mary's bed and breakfast, says they've had a significant decline in clientele since Airbnb rentals started popping up in the area. 

He said he's in favour of healthy competition, but believes there's an unfair disadvantage.

B&B co-owner Patrick Monsigneur says he has seen a significant decline in clientele since Airbnb became popular around the Saint Mary's area. (Marie Isabelle Rochon/CBC)

"We are no longer on an even playing field because the competitors aren't paying taxes, and paying all the fees and meeting all the requirements," he said.

"We collect taxes for the government. Unregistered and unlicensed operations are not collecting those taxes."

Airbnb says homes are not hotels

An Airbnb spokesperson told CBC the province is home to many operators trying to make ends meet.

"Airbnb believes in paying its fair share, but given the casual nature of home sharing, our hosts should not be treated like corporate hotels. We already work with the Canada Revenue Agency to remind hosts across the country of their obligations during tax season," said Alexandra Dagg in a statement.

The view of Bonavista from White Rock Trail. (Linda Lane)

The company said it is not aware of any other Canadian municipality that is taxing Airbnb hosts as businesses based on their property assessment value. 

More regulations needed

The lack of regulations on Airbnb properties also concerns Larry Laite, chair of Hospitality Newfoundland and Labrador.

There are no health inspections, or inspections done by fire departments or service NL. 

"It's something that we have asked … that there be a legislative review done and completed on the tourism establishment act so that they can be regulated and legislated," said Laite. 

He wants Airbnb properties to undergo health and fire inspections, and other scrutiny that licensed businesses encounter.

"Without having those regulations and that comfort zone … we are concerned that this can damage the work that has taken place over the last 25 years to build Newfoundland into a destination that people want to come to."

Read more from CBC Newfoundland and Labrador

With files from Marie Isabelle Rochon

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