B.C. tax revenue is clashing with short-term rental restrictions, according to new claims by Airbnb.
Hosts renting out space in B.C. communities through Airbnb generated $93 million in taxes in 2023, the vacation rental company said last week.
This accounts for $23 million in municipal and regional district taxes (MRDT) and $69 million in provincial sales taxes (PST).
“B.C.’s new short-term rental law is going to significantly impact the number of affordable accommodations across the province, particularly with peak tourism season around the corner. And with B.C. facing a nearly $8-billion deficit, the province also stands to lose tax revenue generated by short-term rentals,” Nathan Rotman, policy lead for Canada at Airbnb, said in a statement referencing deficit forecasts in the latest provincial budget.
Airbnb says nationwide it has generated approximately $319 million in taxes, including approximately $164 million in federal goods and services tax, harmonized sales tax and PST.
Andy Yan, director of Simon Fraser University's City Program, said he wants to see the data broken down.
The figures are based on Airbnb's calculation of how much PST and MRDT was remitted to the B.C. authorities, the company said in an email to Glacier Media.
“If they're so concerned about taxes, why didn't they consider charging hotel taxes and getting properties to pay for commercial rates as opposed to residential rates? If you're really talking about taxes, Airbnb, then let's talk about taxes,” said Yan.
The commercial property tax rate is $9.38109 per $1,000 of taxable value while residential sits at $2.78070 per $1,000 taxable value, making tax rates for commercial properties three times higher than residential properties.
“The core issue comes to this perspective that Airbnb is turning residential properties into revenue-generating commercial properties. In [B.C.] we tax commercial properties differently than how we tax residential properties, and significantly higher in the case of the City of Vancouver,” said Yan.
The province is implementing new rules for short-term rentals on May 1, restricting accommodations offered through online platforms such as Airbnb or Vrbo to an owner’s principal residence, in addition to forcing short-term rental platforms to share their data with the province.
Most of the rules will apply to communities that have a population of 10,000 or more.
Vancouver also cracked down this year on these rentals by increasing the cost of a short-term rental license from $109 to $1,000.
A study by the Urban Politics and Governance research group at McGill’s School of Urban Planning found that short-term rentals took 16,810 housing units off of B.C.’s long-term rental market in June 2023, “signifying a 19.1 per cent decline in housing availability over 2022."
The study also showed for every addition of one dedicated short-term rental per 100 rental units in a neighbourhood, rents increased an average of $49 for that neighbourhood.
However, a Conference Board of Canada survey contradicts these reports and found little correlation between the rise in Airbnb-style short-term rentals and the rise in long-term rental costs.
“As jurisdictions within all three levels of government manage budget deficits, the taxes generated by stays on Airbnb continue to be a valuable source of revenue for many Canadian communities,” said Airbnb in a March 21 blog post on the tax data.
Domestic travel using Airbnb increased last year with nearly eight million domestic guest arrivals, an increase of nearly 30 per cent since 2019, according to the company.
B.C. tourism revenue totaled $18.5 billion in 2022, according to Crown corporation Destination BC.
“This isn't just about Airbnb. It's about short-term rentals. But it's not about short-term rentals. It's about accommodations for what is I think the second biggest sector of the economy and the City of Vancouver, which is tourism,” Yan said.
