Nova Scotia

Nova Scotia mulls adding booking levy for Airbnb-style rentals

A working group set up to look at short-term rentals by online companies such as Airbnb is suggesting the province consider a levy on online bookings but is warning the province not to tax operators as businesses.

Working group says commercial tax rates could drive operators out of business

Business Minister Geoff MacLellan speaks to tourism operators at the Halifax Westin Hotel on Monday. (Jean Laroche/CBC)

Nova Scotia should consider establishing a per-booking levy on sharing-economy companies such as Airbnb and VRBO, according to the working group set up a year ago to review the impact of such businesses.

The group says forcing people who run short-term rental businesses to pay commercial tax rates "could drive these operators out of business and take needed accommodation units out of the marketplace."

It said a per-booking levy would work better. 

Business Minister Geoff MacLellan, the minister responsible for the file, told a roomful of tourism operators in Halifax Monday that cabinet would need more time to decide what to do. 

After his luncheon speech, MacLellan told reporters not to expect a decision till the spring. He said the final report by the working group landed on his desk just a few weeks ago.

Call to repeal Tourist Accommodations Act

Among its suggestions is exploring the feasibility of an "online platform tourist levy," encouraging government to work with online booking platforms "to encourage hosts to understand and comply with current regulatory and taxation responsibilities," and a call for the province to "repeal the Tourist Accommodations Act."

MacLellan said his department was still considering what to do.

Banning Airbnb and other short-term rental companies is not an option, according to the minister.

"We need more accommodations, whether they be constructed through the traditional channels of hotels, motels, bed and breakfasts, etcetera, or it's the shared economy. We need 9,000 more rooms," he said.

The government has set a target of seeing $4 billion worth of tourism business by 2024. Currently the industry generates about $2.7 billion worth of business.

Hosts earn about $6K a year

The report says in 2017 there were about 2,000 Airbnb hosts in Nova Scotia. They ran between 2,500 and 3,000 unlicensed short-term rental units across the province.

"Around 12 percent of the total Nova Scotia hosts have multiple listings, such as a home and cottage, two or more rooms in a bed and breakfast, or two or more homes, apartments or condos," it said. "A typical listing is available between 40 and 50 nights a year."

It said Airbnb reported the median income for the hosts is $6,000 a year.

Tourism Nova Scotia, the provincial agency responsible for promoting the industry, has been exploring a marketing partnership with Airbnb and the working groups said those talks should continue.

The working group was made up of 14 non-government members and 11 government representatives from six departments.