Airbnb is opposing a move by the government to levy goods and services tax (GST) on its accommodation bookings as of April 2024. The company is basing its opposition on suggestions that such a change would stifle the country’s economy and cause it to lose as much as $500 million annually.
The tax was proposed in August this year, with the intention to charge GST on bookings made through accommodation providers like Airbnb and fares collected by ride-sharing services like Uber. Currently, it is the drivers and accommodation providers that are responsible for collecting and paying GST on fares and bookings if the taxable income surpasses $60,000 in any 12-month period. Where income derived surpasses this threshold, the drivers and accommodation providers are expected to register and levy GST.
However, according to Inland Revenue, these revenues often fall below the threshold. Thus, the proposal is to have the platform providers levy the tax on all sales. This would allow the government to rake in an additional $47 million per year. The change is being proposed to take effect in April 2024 to give the platform providers to make required software adjustments to accommodate this.
According to recently released Parliamentary submissions, the companies are however calling this tax change unfair. Airbnb stated that imposing the levy would result in an unfair new tax on tourism that would stifle the country’s economic recovery. It comes at a time when the nation has only recently reopened its borders and tourism operators are struggling.
Airbnb further pointed to modelling carried out based on the Oxford Economics Report that forecasted a $500 million decline in the country’s GDP that would otherwise have come from their bookings. The company added that travellers often made their travel decisions based on pricing and as such, the economic impact of the added GST would be deeply felt where traditional accommodation was less available and tourism was a major economic contributor.
Despite this opposition from platform providers, drivers and accommodation providers, there is some support for the tax change from the Hospitality Association. According to the association’s chief executive, Julie White, about a third of its membership made up of commercial accommodation providers feel frustrated by the lack of a level playing field with competition like Airbnb.
There are also concerns that Airbnb properties are swamping communities, driving out local residents and inflating apartment rental prices. Not to mention the influx of strangers and increase in noise levels that such accommodations bring into low-density neighbourhoods. Zoning where Airbnbs can operate is being recommended as a way to reduce conflicts and manage this tourism sector.
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