Airbnb collects more than double the PST that B.C. expected
Credit to Author: Joanne Lee-Young| Date: Thu, 07 Nov 2019 01:02:33 +0000
Airbnb said it collected and paid more than double the provincial sales tax the B.C. government expected in the first year of a tax agreement between the two.
When the provincial government announced in February 2018 it would collect PST from Airbnb operators, it estimated it would receive $16 million from the homeowners who offer short-term rentals on the site.
On Wednesday, the company said it sent the province $33.7 million between October 2018 to September 2019.
“The PST payment agreement is a new tax application, and as with any new tax application, we were conservative in our revenue projections,” Finance Minister Carole James said. “We’re closely watching the data as it comes in, and we’re making sure municipalities have the information they need to make decisions about regulating short-term rentals.”
It’s not clear whether the number of Airbnb rental providers has increased or the number of visits to them has increased, or both.
Airbnb says that in 2018 there were around 500,000 “guest arrivals” in Vancouver and two million across B.C. It wasn’t able to update the number of rental providers in B.C. on Wednesday.
The larger-than-expected PST revenue comes as City of Vancouver staff are recommending, in a review of the city short-term rental program, that the mayor ask the province for an agreement on sharing the money for funding affordable housing.
The province has said from the beginning that PST collected from Airbnb would go toward affordable housing, but it’s not clear exactly how or where this money will be spent.
Airbnb takes long-term rental units off the market and increases house prices and rents, said Davide Proserpio, an assistant professor of marketing at the Marshall School of Business at the University of Southern California, who looked at the impact in American cities.
He said the effect of Airbnb differs widely from city to city, depending “on housing market characteristics, how many Airbnb listings are available, etc.”
“Collecting taxes and reinvesting the money to reduce housing costs is good, but whether this is enough to make winners (mostly homeowners) and losers (those that rent) happy is a much harder question that requires some thinking and analyses,” said Proserpio.
Airbnb said that it also collected and paid $9.2 million in municipal and regional district taxes, which is passed on to organizations to promote local tourism. This amount also surpassed the province’s estimate of $5 million, which is raised by charging an up to three per cent tax on Airbnb’s short-term rentals.
Airbnb said of that $9.2 million, about $3.5 million is allocated to Tourism Vancouver for “tourism promotion in the City of Vancouver.”
Housing activist Rohana Rezel thinks the large gap between what the province thought it would collect and what came in could be “because many of the Airbnb are commercial operations and not ‘spare rooms in principal residences’ as Airbnb would have us believe.” This would put them in contravention of the City of Vancouver’s regulations. But Rezel said “they’re quite poorly enforced. I have found at least 1,500 non-compliant listings” based on multiple listings that, for example, use one licence or that seem fake.”
The province’s tax agreement is with Airbnb, which has a much larger market share of listings in Vancouver than other sites that offer short-term rentals such as Expedia and TripAdvisor.