Nova Scotia ministers debate establishing pre-booking levy on short-term rentals

Canada: A working group has called on Nova Scotia to consider establishing a booking levy on shared economy companies such as Airbnb and VRBO.

The group, set up just one year ago to review the impact of short-term rental businesses, said forcing rental business owners to pay commercial tax rates “could drive the operators out of business and take needed accommodation units out of the marketplace”. It also said a per-booking levy would work better.

Business minister Geoff MacLellan, who is responsible for the file, told a group of tourism operators in Halifax that cabinet would need more time to decide on the best course of action.

MacLellan also said a decision should not be expected until at least the spring as the working group’s final report was handed to him just a few weeks previously.

The group suggested to ministers that they explore the possibility of repealing the tourist accommodations act in the province and introduce an online platform tourist levy which would “encouraging government to work with online booking platforms “to encourage hosts to understand and comply with current regulatory and taxation responsibilities”.

However, MacLellan added that banning Airbnb and other short-term rental companies was not an option on the table.

He said: “We need more accommodations, whether they be constructed through the traditional channels of hotels, motels, bed and breakfasts, etcetera, or it’s the shared economy. We need 9,000 more rooms.”

The government has set a target of seeing $4 billion worth of tourism business by 2024. Current estimations suggest the industry generates about $2.7 billion worth of business.

The report said there were around 2,000 Airbnb hosts in Nova Scotia in 2017 and those hosts ran between 2,500 and 3,000 unlicensed short-term rental units across the province in that time.

It said: “Around 12 per cent of the total Nova Scotia hosts have multiple listings, such as a home and cottage, two or more rooms in a bed and breakfast, or two or more homes, apartments or condos. A typical listing is available between 40 and 50 nights a year.”

The report also added Airbnb said the median income for the hosts in Nova Scotia stands at $6,000 a year.
Tourism Nova Scotia, the regional agency tasked with promoting the industry, has been exploring a marketing partnership with Airbnb and the working groups said those talks should continue.

The working group is made up of 14 non-government members and 11 government representatives from six departments.