Home owners and tenants who are renting their premises on Airbnb will soon have to start charging an 8% sales tax and a 3% hotel tax, the B.C. government announced February 7.
“Once we have this arrangement in place, we will make changes to the legislation and then Airbnb will be part of – as every other short-term rental organization will be – part of our tax system, which then includes audits and all the other rules that are in place for everybody who pays taxes in B.C.,” said Finance Minister Carole James.
James said that money the province raises from the tax will go toward initiatives in the upcoming provincial budget that aim to make housing more affordable. Money that goes to municipalities from the hotel tax (also known as the municipal and regional district tax) will go toward promoting tourism.
Had these new taxes been in place in 2017, Airbnb’s more than 18,000 hosts in B.C. would have contributed more than $18 million in taxes, said AirBnb public policy manager Alexandra Dagg. The B.C. government anticipates that the new tax will generate $16 million for the province and $5 million for municipalities.
Dagg estimated that the average Airbnb host in B.C. made $8,200 last year, or about $683 per month.
Airbnb started charging hosts taxes in Portland, Oregon and has since started levying taxes in various jurisdictions, Dagg said.
“We’ve worked with many forward-thinking authorities on similar initiatives in more than 350 jurisdictions around the world,” she said.
“We continue to collaborate with policy makers around the globe because agreements like these allow cities and provinces to rightfully benefit from the economic impact of home sharing.”
Municipal governments will continue to be able to regulate Airbnb and other short-term rental companies.
On November 14, Vancouver city council approved regulations to allow Vancouver residents to rent their principal residence on a short-term basis.
From spring 2018 onwards, residents will be able to apply for a business license to operate a short-term rental but until the regulations are enacted short-term rentals remain illegal in Vancouver.
The city plans to reveal details on how residents can apply for a business license this spring.