British Columbia’s new tax on Airbnb to fund affordable housing
For the first time in Canada, a provincial government has made a deal with short-term rental broker Airbnb which will re-allocate part of Airbnb’s collected taxes and put them towards funding the province’s affordable housing commitments. In this unprecedented move, Finance Minister Carole James says, “it acknowledges short-term rentals [as] part of B.C.’s economy.”
“It recognizes the reality today, not only in B.C. but across the country, in fact across our world," she said. "The sharing economy is here. We need to make sure as governments, that we look at our tax systems, that we look at our arrangements we have in place and we make sure we create that level playing field."
As part of the agreement, Airbnb will be allowed to “collect 11 per cent in taxes from short-term rentals and send the proceeds to the government. The taxes included the eight per cent provincial sales tax and municipal or regional district taxes of up to three per cent on accommodation.”
The province’s upcoming budget will address what analysts believe is a financial pitfall that concerns affordable housing communities everywhere. Home buyers and homeowners have been known to keep secondary properties as short-term rentals, thus limiting the availability of long-term rentals in the places where Airbnb hosts are active.
B.C.’s Premier John Horgan has stressed the need to increase the number of affordable family homes. Greater Vancouver frequently ranks as one of the most expensive Canadian cities for property taxes, real estate and rental housing.
During last year’s B.C. election, The New Democrats promised “to deliver 114,000 housing units over the next decade.”
In response, a statement from Green party Leader Andrew Weaver maintains that the Airbnb deal is a “good step toward tax fairness, but it will not improve the need for long-term rentals.”
He believes there should be strict regulation on short-term rentals in the entire province, not just in Vancouver and Victoria.
"In our extremely tight rental markets, with near zero per cent vacancy rates, short-term rentals like Airbnb are taking many units out of long-term rental supply. We are in a crisis — we need to ensure that houses are used for homes for British Columbians first and foremost."
Perhaps other Canadian provinces will take note.