In a previous entry, I’ve discussed some of the regulatory challenges the rise of Airbnb has presented to the government, on all levels. With hosting properties in 35,000 cities, this means governments are realizing that Airbnb represents an untapped revenue stream. Because of this, hosts are facing new regulatory and tax realities in multiple jurisdictions.
While the onus is on hosts to understand the requirements of the jurisdiction their properties are located in, Airbnb also provides valuable information at their site, under the heading Responsible Hosting.
Airbnb partners with cities
In March of 2014, CEO Brian Chesky published his Shared Cities manifesto in the online publication, Medium. Chesky’s vision is that of “more shareable, more livable cities”. Coinciding with the advent of Airbnb’s partnership with the City of Portland, the release of Shared Cities represents the sharing economy’s coming of age.
Airbnb’s partnership with Portland includes the collection of the City’s hotel tax from guests, instead of leaving responsibility for this with hosts. The tax now appears as a line item on each guest’s invoice. Airbnb then remits the amount collected to the City. The Portland initiative also includes voluntary donations from hosts (matched by the City), which go to local charities chosen in partnership with Airbnb. Finally, Airbnb has made a commitment to Portland to pursue corporate owners and managers who abuse the system.
San Francisco has now joined Portland as a Shared City, as well as Amsterdam and Paris. The entire nation of India has also signed on. This proactive initiative on the part of Airbnb promises to cut through regulatory and tax regimes, simplifying an often onerous responsibility, as it rolls out across the world. But it’s not all smooth sailing in San Francisco.
San Francisco reaches out to providers for help
Since instituting laws governing the provision of short-term rentals by sharing economy participants like Airbnb last February, San Francisco has struggled with enforcement. A January 7 article in the SF Gate reveals that only 879 hosts (of thousands) have registered with the City. Further, San Francisco is pursuing almost $500,000 in fines under the new laws, primarily leveed on corporate providers with multiple listings. As a result, the City has written an appeal to Airbnb, FlipKey and Craigslist to enlist their support with enforcement. Airbnb has issued a statement saying “we will continue to work with the city”. To date, Airbnb is the only company which has instituted a system of tax compliance in recognition of the City’s newly-instated regulatory regimes.
Quebec takes legislative action re: taxes
Meanwhile in Canada, the province of Quebec has passed provincial legislation to compel the sharing economy’s participation in its regime of accommodation taxes and regulations. Adopted on December 1, Bill 67 passed the provincial assembly with unanimous assent. All hosts must now register to obtain a classification certificate from Tourisme Quebec, as well as pay the 3.5% lodging tax other providers must. In addition, hosts will be expected to navigate the complex regulatory structure of municipalities, including the City of Montreal.
Spurred to action by the province’s powerful hospitality industry, the province of Quebec has answered its leaders’ objections to Airbnb’s competitive edge. Hosts may no longer fly under the radar of taxes and regulations. Minister of Tourism, Dominique Vien has been quoted as saying that “everyone has to skate on the same rink” and that’s now the case.
Despite all this, (and heavy fines proposed for hosts who fail to comply) Airbnb rentals in Quebec have more than doubled in the past 12 months and are now almost 10,000 strong.
Airbnb working with City of Vancouver and Province of BC
A similar scenario to that played out in Quebec is now unfolding in British Columbia, where Tourism Vancouver is pressing both the City and province to follow suit.
The City of Vancouver is a tourism hot spot and home to almost 5,000 host properties as of December, last year. This represents a 60% growth in listings since 2014. Even since June, 2015, Airbnb listings in Metro Vancouver have exploded, with no fewer than 1,000 new listings entering the market.
Because of Airbnb’s rapid penetration of Vancouver’s booming accommodations sector, Tourism Vancouver is asking that its hosts pay the same room tax traditional providers are on the hook for. Raised from 2% to 3.5% on September 01 of last year, projected revenues mean Tourism Vancouver’s coffers will expand by $16 million. With one Airbnb rental for every four traditional hotel rooms in the city, this means a significant boost to the fortunes of this agency.
Airbnb spokesman, Nick Papas, has commented that the company has been “having positive and productive conversations with community leaders (in Vancouver)” and also that the company would “welcome regulation”. With no Airbnb host properties currently licensed by the City of Vancouver, there are multiple regulatory levels to address; something City staff are currently working on.
At the provincial government level, large Airbnb hosting entities in the city (and, in fact, any who rent four or more suites) are technically subject to the hotel tax. To date, the province has compiled no data on these. Neither has it collected any monies. BC’s Minister of Finance has stated that the provincial government is working with Airbnb and that “streamlining occupancy tax collection on behalf of hosts is one option the province may consider in future”.