By Ezra Black
The local business community is calling on the provincial government to tax Airbnb-style accommodators as if they were hotels but East Kootenay MLA Bill Bennett said the rules would not be changing until after the provincial election in May.
“It is a major change in policy,” said Bennett in a letter to Fernie Mayor Mary Giuliano. “There is real potential to have the matter rectified early in the next term of government should our party be re-elected.”
Ministry of Finance regulations exempt anyone renting out four or fewer hotel units to pay provincial sales tax and municipal and regional district tax. Changing the rules would compel active short-term rental hosts to pay the tax, which can be up to three per cent.
According to Airbnb's own data there are 100 active hosts in Fernie. In 2016, they provided accommodation for about 3,000 guests; a 252 per cent increase from the year before. The average guest stayed for 3.2 nights.
The average host rented their space 31 nights per year for which they typically earned $4,800.
During a discussion of the issue at a Dec. 12 council meeting, Airbnb host Rob Klein said the short-term rental of his home was an economic lifeline.
“Originally we bought our house and we wanted to have a suite in our basement for long-term tenants,” said Klein. “Now that we have a two-year-old, we have family coming to help and having a long-term tenant doesn’t work as well. Our tenants don’t love being below a two-year-old running around and throwing toys at the end of the day either.”
Klein said he would be willing to pay tax on his property but said the rules governing short-term rentals are unclear.
“I think a lot of us are open to paying a tax or doing whatever we need but unless there are clear rules, we’re not going to follow them,” he said.
Patty Vadnais, executive director, of the Fernie Chamber of Commerce, disagrees with Klein. She said the City of Fernie would already be regulating short-terms rentals if it were enforcing its zoning bylaws.
Fernie’s zoning bylaw doesn’t mention Airbnb or short-term rentals but it does regulate bed and breakfast type businesses that rent out three bedrooms or less. Those must be licensed and registered with the City. Vadnais argued that Airbnb hosts should also have to comply with the bylaw.
“That would create an equitable environment for all of our business activity,” she said.
But CAO Norm McInnis said the zoning bylaw is unenforceable. He said nobody who offers short-term rentals in Fernie has a business license because the people who wrote the zoning bylaw could not have anticipated services like Airbnb.
“We’re very limited in what we can do,” he said. “We’d have to go rogue and go undercover and start searching the internet.”
McInnis said the City would continue lobbying until the province lifts the tax exemption and gives the City the tools it needs to enforce the rules.
In addition to lifting tax exemptions, McInnis said other bylaws should mandate that short-term rental spaces be attached to the host’s primary residence. He said those rules would be important for preserving affordable housing in Fernie.
“We still need the longer-term rental units in town,” he said. “We have an affordability situation in Fernie and we want to continue to have longer-term units.”
Renting out secondary suites or second homes for less than 30 days would be prohibited, he said.
“We’re going to try to keep those in the long-term rental stocks,” said McInnis. “People will have to decide whether or not to create a secondary suite, which will restrict them from doing short-term rentals. But the upside is they won’t have to go through all the hassle of getting a business license and paying taxes.”
Mayors of other resort communities are also pushing the province to tax short-term rental hosts.
According to a letter from Josie Osborne, Mayor of the District of Tofino, and Al Raine, Mayor of Sun Peaks Resort Municipality, to Finance Minister Mike de Jong, the tax-exemption might have been brought in to stimulate homebased bed and breakfast style businesses in rural or remote areas where the tourism economy was weaker.
“Homeowners could operate small bed and breakfasts or nightly rentals without too much paperwork, adding to their family income and increasing the diversity of accommodation offerings for visitors,” said the letter.
However, the tourism landscape has changed, they said. With a robust and growing B.C. tourism economy, online services like Airbnb are now a significant player in the tourism industry and a potential goldmine in resort communities.
“No longer does it simply augment family incomes, for many it is a primary or significant source of income,” they concluded.