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British Columbia Airbnb says it would support B.C. law for hotel tax on its rentals

The Airbnb app is displayed on an iPhone and iPad.

Andrew Harrer/Bloomberg

Airbnb Inc. says it's willing to collect hotel taxes from people in British Columbia using its service to rent out their homes, which the company says could raise more than $4-million a year.

The U.S.-based company outlines the offer in a letter to the provincial government, obtained by The Globe and Mail, that says Airbnb would support a change in the law to impose the hotel tax on short-term rentals. Airbnb has made such an offer with increasing frequency to cities and states in North America as it scrambles to demonstrate it is being a good corporate citizen.

Provincial and municipal governments across the country have been looking for ways to regulate Airbnb and similar services, particularly in regions where tight real estate markets have led to concerns that short-term rentals are eating up much-needed housing stock. However, only Quebec has reached an agreement with the company by which it collects and turns over a provincial tax.

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Critics say that while it's good that Airbnb is at last offering to take on some of the responsibility for policing hosts who have been flouting the law until now, the move doesn't address the real problem Airbnb is creating.

"They're hoping that this is going to suffice. But [tax] is by far the secondary concern being voiced by everyone. It's the effects it is having on housing affordability and availability" that is the primary concern for residents and politicians, said David Wachsmuth, an urban policy professor at McGill University in Montreal.

He said Airbnb is clearly moving to work more co-operatively with cities, states and provinces to forestall moves to limit or ban rentals, which would be much more challenging for the company.

"They're seeing that the public and government is turning to more aggressive legislation," said Prof. Wachsmuth. "I think this move is very cynical but I don't think the promise of some revenue for the province is going to work."

He said the main positive news from the Airbnb offer is that it shows that public pressure is pushing the company to take on an enforcement role, instead of claiming that it has no responsibility because it only operates a platform.

In recent months, an announcement has come every few weeks about an agreement that Airbnb has reached with this or that U.S. state to collect and pay a tax of some description. In June, it was Wisconsin; in August, South Dakota; in September, Kentucky.

Airbnb's Canadian public-policy head Alex Dagg made the case to B.C. Finance Minister Carole James in an Oct. 20 letter that this province could benefit from the same kind of arrangement.

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"Tourism in B.C., including in cities like Victoria and Vancouver, grows every year despite skyrocketing hotel prices and record-high occupancy rates. Applying the [new tax] to home sharing will allow the province to tap into a growing source of revenue that will benefit the tourism industry across B.C.," she wrote.

"We have had a long-standing desire to pay our fair share," said Ms. Dagg, who noted that B.C. would collect $4.4-million by the company's estimate, $1.9-million of that from Vancouver. "To that end, we have concluded more than 375 tax agreements around the world – including a landmark agreement with Quebec – to collect and remit the 3.5-per-cent tax on lodging provincewide."

Ms. Dagg said Airbnb would support a change to the province's current laws on hotel taxes, which exempt operators who have fewer than four units. A change could require even hosts with only one unit to pay the hotel tax.

The Finance Ministry, which has met with Airbnb representatives recently, responded with an e-mailed statement.

"We have received Airbnb's letter and are currently reviewing their proposal. We are committed to ensuring a fair, competitive marketplace where people can find affordable rental housing and firms are treated equally by the provincial government."

Housing Minister Selina Robinson has said the province will do something to regulate short-term vacation rentals but provided no details about what mechanisms it might consider.

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The City of Vancouver is starting a public hearing this week to hear input on its proposed new policy to regulate short-term vacation rentals by allowing them only for homeowners who are sharing a room in their house or out of town temporarily. If passed, the new regulations would make it illegal for someone to rent out a condo or house full-time as a quasi-hotel operation.

The city would charge a small fee as well, but it is only meant to cover administration costs.

Vancouver council took action on limiting vacation rentals after several years of complaints about how they were contributing to the city's shortage of affordable housing, as landlords converted units – sometimes entire buildings of them – from long-term to short-term rentals.

About 6,000 units are listed for rent through Airbnb in Vancouver, concentrated in popular areas such as downtown, Kitsilano, Fairview and Commercial Drive.

About a dozen vacation-rental platforms operate in Vancouver. Only Airbnb, the operator with by far the largest number of units, and HomeAway/VRBO have had direct negotiations with the city.

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