Despite illegal status, Airbnb taxes headed for Oak Bay

Oak Bay expects to receive some of the funds now that Airbnb will pay tax, despite the fact the short term rentals are illegal.

Finance Minister Carole James made the tax announcement at the legislature Wednesday, saying the government had been looking at new tax models to build tax fairness.

Airbnb will begin collecting the 8 per cent PST and the up-to-3 per cent municipal and regional district tax (MRDT) in short-term accommodations provided in B.C.. Oak Bay has a municipal 2 per cent hotel room tax. The province estimates Airbnb will remit about $16 million through the PST and an additional $5 million through the MRDT.

“As a government our role is to make sure that everyone is playing by the same rules,” James said. “In order to do that we need to look at a new way of doing business and new tax models.”

The money collected is to help fund affordable housing in the province as well as provide tax fairness for the hospitality industry, James said.

Airbnb is an American company that runs an online marketplace and hospitality service for people to lease or rent short-term lodging including cottages, apartments, rooms and more, with many Oak Bay listings featured on its website. Some municipalities such as the City of Victoria have made moves to regulate short term rentals. In Oak Bay, they’re illegal based on zoning and home business bylaws.

“Airbnb are not permitted to operate in Oak Bay. They are illegal,” says Oak Bay Mayor Nils Jensen. “These are often in what we now call established neighbourhoods in homes that are designated as single family dwellings.”

That said, last September, Oak Bay met with Airbnb personnel during the Union of BC Municipalities conference and learned some do exist in the community. However, based on the numbers told to Oak Bay last fall they don’t expect a windfall.

“We have a hotel tax of 2 per cent that’s collected by the hotel and the guest house, they in turn remit it to the province, who in turn pass it to us,” Jensen said. Those fund Oak Bay Tourism initiatives. “There may be extra monies coming to us, but it has to be said again that these are illegal and should not be operating.”

If Airbnb contributed to a similar tax in 2017, the government would have collected about $18 million.

“This is a defining moment for Airbnb in British Columbia,” said Alex Dagg, public policy manager for Airbnb in Canada. “These changes are a welcome opportunity to continue helping the province and its residents benefit from the positive economic impacts of home sharing.”

“While this announcement is a good first step from a tax fairness perspective, it will not change behaviour or free up long-term rental stock that has been taken out of the market due to short-term rental services,” said Andrew Weaver, leader of the BC Green Party, in response to Wednesday’s announcement. “The province needs to proactively encourage and support local governments to take action to restrict and regulate short-term rentals, as the City of Vancouver and the City of Victoria have done.”

In the extremely tight rental markets, with near zero per cent vacancy rates, short-term rentals like Airbnb take from the rental supply, Weaver said. “We are in a crisis - we need to ensure that houses are used for homes for British Columbians first and foremost.”