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‘The province must take action’
St. John’s Mayor Danny Breen said the city is missing out on an estimated $300,000 annually because it can’t collect a four per cent tourism marketing levy from Airbnbs.
Under provincial legislation, the tourism marketing levy can only be charged by regulated or registered rental properties such as bed and breakfasts and hotels.
Because Airbnbs are not registered with the province, they cannot charge that fee.
“But we’re hopeful that we can get the change made,” said Breen.
On Tuesday last week, he met with Municipal Affairs and Environment Minister Derrick Bragg about the issue. He said he’ll be meeting with Tourism, Culture, Industry and Innovation (TCII) Minister Bernard Davis “shortly” to discuss it further because the necessary legislation change has to come from that department.
An emailed statement from TCII says government has been working with Hospitality Newfoundland and Labrador (HNL) on short-term rental accommodations “to ensure fairness and equity in the industry.”
A working group is established with several departments — TCII, Department of Finance, Municipal Affairs and Environment, and Service NL — to address taxation and regulation of short term rental accommodations.
TCII’s statement said departments are reviewing their regulatory framework and legislation.
It also said government partners with HNL on the Tourism Assurance Program (TAP) to promote only licensed TAP compliant accommodations in all the province’s tourism marketing programs.
“Our work with HNL also includes exploring current and future policy actions along with considering possible legislative changes to the Tourist Establishments Act,” reads the email.
Hosts shouldn’t be treated like hotels: Airbnb
As for Airbnb, it says hosts shouldn’t be treated like hotels.
“Airbnb believes in paying its fair share, but given the casual nature of home sharing, our hosts should not be treated like corporate hotels,” said Alexandra Dagg, Airbnb Canada’s public policy manager in an emailed statement.
“We already work with the Canada Revenue Agency to remind hosts across the country of their obligations during tax season, and we have agreements in more than 400 jurisdictions globally to collect and remit tourism taxes on behalf of our hosts and guests.”
In Canada, Airbnb collects and remits tourism taxes in several jurisdictions – including in Quebec, British Columbia and several communities in Ontario.
"...given the casual nature of home sharing, our hosts should not be treated like corporate hotels." — Alexander Dagg
Airbnb emailed The Telegram information that says in the first 18 months of its agreement with the province of Quebec, Airbnb collected and remitted over $11 million to the government in tax on lodging, and in its first year of an agreement with the City of Ottawa it collected and remitted over $1 million in municipal accommodation tax.
The email also said that in order to legally collect accommodation taxes on behalf of hosts and guests, Airbnb entered into voluntary tax collection agreements with those jurisdictions.
Bonavista charges business tax
In Bonavista, the town council addressed the concern by taxing Airbnb hosts the same as any other business.
Mayor John Norman said hosts who leave a business tax unpaid for an extended period could have services cut — the same process for any business or resident who doesn’t pay their taxes, he said.
Norman said the town hasn’t yet had to cut services for Airbnb hosts because they’ve all paid the business tax.
There is also someone on staff at the town hall who checks weekly for much of the year to see if there are any new hosts posting on the Airbnb platform for the Bonavista area. Staff then check to ensure the host is registered as a business with the town.
Breen said that method would be too difficult in a larger centre like St. John’s, plus the capital has a blended commercial tax which means bed and breakfasts pay the regular residential mil rate anyway.
“It’s a dangerous precipice I think that the province is at, and the province must take action on it at a provincial level.” — John Norman
In St. John’s, the added tourism marketing levy is used to fund destination marketing and cover the financing costs on the Convention Centre, but Breen said the city could be “a bit short” on that over the next couple of years and being able to collect the levy from Airbnb hosts would help to cover those costs.
Plus, Breen said Airbnb hosts “certainly get a benefit from both destination marketing and from the Convention Centre.”
As for Norman, like Breen, he said he’s looking forward to a change in provincial legislation to regulate Airbnbs.
“There are some regions that have been really, really negatively impacted in the business sector, directly resulting from a skyrocket in Airbnbs. There are accommodations in Newfoundland that are closing that have been operating for many, many, many years. Visitation is up, yet they could not turn profit this year.
“And there are stories out there in multiple communities like that, and they have gone from zero to 10 to 20 Airbnbs in a year or two. So, the smaller B&Bs and vacation homes and so on that were private but registered, and paying their business tax, and registering with the province and so on, they just can’t survive.”
‘It’s a dangerous precipice’
Norman said he sits on the board of Legendary Coasts of Eastern Newfoundland, one of five destination management organizations in the province. He said their organization has been discussing this for several months.
“The province should be concerned because there will be fewer taxes collected as a whole. If people want to all regress, I mean the discussion was in the Bonavista area, ‘Well, they’re not going to pay taxes, and they’re not going to pay fees, I’m going to deregister and not pay it either.’ And before you know it we would be out many tens and hundreds of thousands of dollars in taxes and fees.
“It’s a dangerous precipice I think that the province is at, and the province must take action on it at a provincial level.”
Outside of taxing and leveling the playing field between accommodations, Norman said he also has safety concerns with Airbnbs because they are not registered with the province.
“Let’s wait until an old, uncertifiable building that’s running as an Airbnb burns down with a family inside, and then everyone asks questions about how we could have prevented this. And that’s actually where the discussion started in Bonavista.
“Businesses in our area go through tremendous rigmarole to work with Service NL and TCII and others to make sure they’re properly registered, inspected, insured, liability and on and on. There’s a large swath of unregistered Airbnbs that I know at least from my region, I can’t speak for the province, but in our region, do not carry those.
“That is a major concern, and it doesn’t take no more than a disaster or two to really put a major smear on an entire sector.”
Airbnb’s website states it covers every booking with $1M USD in property damage protection and another $1M USD in liability insurance.