News / Toronto

Mayor's proposed tax on short-term rentals would be first in Canada

It's part of a larger hotel tax, the mayor is proposing along with DVP and Gardiner roll tolls to raise money for city projects.

There are 10,200 Active Airbnb listings in Toronto, according to independent website InsideAirbnb.

Reuters file photo / Reuters

There are 10,200 Active Airbnb listings in Toronto, according to independent website InsideAirbnb.

Toronto would become the first city in Canada to slap a tax on short-term rentals like Airbnb if Mayor John Tory wins support from council.

The plan will be discussed for the first time, Thursday, by Tory’s executive committee. A staff report estimates a tax of 4 to 5 per cent could bring in $2 to $3 million annually.

The fee for short-term rentals would be part of a larger hotel tax, which could bring in about $20 million a year overall, according to the mayor.

Taxing short-term rentals is a way to “make sure we level the playing field and allow for fair competition in this emerging sector, just as we did for Uber and taxis,” Tory said last week when he announced the idea as part of a larger revenue-generating plan that includes tolls on the Gardiner and DVP.

Some see the tax as a gateway to more Airbnb regulations, something the city is expected to discuss next year.

Thorben Wieditz, a researcher with UNITE Here Local 75 and a member of the Fairbnb Coalition pushing for regulation, said the tax is only “one piece of the puzzle.”

“We should also remind ourselves that a lot of these people don’t pay their fair share in terms of taxation and property taxes,” he said of Airbnb hosts.

Wieditz said the tax should be tied to a licensing system and sites should be accountable when people violate the rules.

Barcelona, for example, recently fined Airbnb and Homeaway about $860,115 (CDN) for advertising and renting out unlicensed apartments, “which is also something to be considered when we think about revenue,” he said.

While Canadian cities haven’t ventured into Airbnb taxing territory, many others have.

The company has agreements in more than 200 jurisdictions around the world to collect and remit hotel taxes on behalf of hosts and guests, spokeswoman Alex Dagg said in a statement.

 “Our community wants to pay their fair share,” she said.

And some cities are charging a lot more than what’s proposed in the staff report headed to executive committee, according to information on Airbnb’s website.

Santa Monica and San Francisco both charge a 14 per cent hotel tax while Philadelphia charges 8.5 per cent.

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