Is Airbnb pocketing the bed taxes it collects?

Trish Burt, Convener, Neighbours Not Strangers.

Dear Byron Shire Councillors and Staff,

Reference your Ordinary Meeting held on 24 August 2017, specifically the Mayoral Minute No. 8.1 File No: 12017/1016  – Establishing a Tourism Council Advocacy Alliance, and specifically:-

Opportunities to recover costs from tourists and/or tourism related businesses:

Airbnb (they already add a tax decided by the destination to their booking system in 23 places around the world – why not in our most needy areas?)

Other online booking agency opportunities (Stayz etc)

Hotel / bed tax (as achieved in much of Europe).

Voluntary and involuntary contribution schemes.

On behalf of our coalition members, including licensed Bed and Breakfast providers, who are based in your Local Government Area, whilst we applaud Byron Councillors for the initiative of establishing a tourism councils advocacy alliance, with the utmost respect, we offer the following in connection with your ‘bed tax’ suggestion above.

There may be 23 places around the world where Airbnb has, at face value, agreed to collect taxes, yet repeated, persistent anecdotal reports suggest that these agreements are proving impossible to enforce, monitor and audit. Airbnb provides nil transparency in terms of their business activities and many legislators are claiming that such ‘tax collection’ is merely a vehicle by which Airbnb is collecting further funds without returning the taxable portion to cities and states, as agreed. With nil transparency, nil access to data, nil true auditing channels, is Byron Council in a better position than, say, the cities of New York and Toronto, to see that Airbnb complies with your proposed taxation regime?

A Hotel/Bed Tax may be successful in Europe and North America etc, but where this is a ‘working model’ the properties involved are all licensed and registered accommodation providers, with a high degree of transparency afforded to taxation and city officials.

Are you able to put a figure on the number, plus identify all the countries from which the web-based platforms that are currently selling tourist/visitor stays in your Byron Shire homes, operate? And do you expect that all these foreign, plus every local operator, will agree to the introduction of such a tax?

Returning to the core issues relating to the short-term tourist/visitor occupation of your residential homes:-

From the very first night, a short-term tourist/visitor rental of a residential dwelling or apartment is a ‘change of use’: Class 1(a) and Class 2 properties are converted to a Class 1(b) or Class 3 ‘use’ – Building Codes of Australia (BCA)/National Construction Code (NCC).

For such a change we would emphasise that in a Class 2 strata property, where common property and maintenance costs are ‘shared’, NO such change to ‘mixed use’ must be permitted; owners have already ‘voted’ to purchase and/or move into a Residential building. The NSW Parliament is in receipt of reports as to the enormous ‘blow out’ in costs when such an activity is permitted to penetrate a strata property. Plus there are repeated and consistent judgements in the NSW Land and Environment Court which testify to the “fundamental incompatibility” of such mixed land use and the “severe” impacts on neighbours.

Where Class 1(a) – free standing, single family – buildings are to be converted for short-term occupancy to either a Class 1(b) or Class 3 property, strict licensing and adherence with Commonwealth and Federal Legislation must first and foremost be met, including, but not limited to, substantial building upgrades in line with BCA/NCC benchmarks, Disability Access and Discrimination legislation, Taxation, etc. As well, what cannot and must not be dismissed are numerous Coroners’ reports plus an Australian Criminality Report. Surely your current Bed and Breakfast providers must staff their properties 24/7 and comply with all commercial taxation requirements, plus the criteria listed above? And one assumes that the consent of neighbours is sought and received prior to any such commercial use receiving permission to proceed in a Residential area?

One also imagines that your Strategic Planners need to know how your housing figures are tracking, without permitting your housing supply to lose an unabated number of dwellings by a ‘simple conversion to Airbnb’ system?

NSW Residents – Byron Residents included – have undertaken all due diligence when purchasing their homes in residential strata buildings and residential suburbs (zones). Their interests and rights must take priority over the financial targets of foreign-based, short-term rental platforms, which notably have not invested one cent in bricks and mortar infrastructure.

Byron Shire is suffering the same contagion – the same housing shortages, rates of homelessness and distress amongst residents – as towns, cities and states around the globe. We believe that your fundamental duty to provide Residents with safe, secure, affordable housing, will be undermined by attempting to apply a bed tax as a ‘quick fix’. Such a step will surely confuse, complicate and eventually exacerbate your housing and social problems exponentially.

We have ‘world’s best’ legislation in NSW plus Land and Environment Court case law. Our Planning and Zoning Legislation must be enforced.

2 responses to “Is Airbnb pocketing the bed taxes it collects?”

  1. Len Heggarty says:

    Dear Byron Council,
    The sheep that come here need fleecing so get on the go-get and police the fleecing and stop your sleeping.
    You seem to be a bit lax on the bed tax.

  2. Jay Gee says:

    Airbnb statements can’t be believed. Dare I say that that their executives are downright liars.

    Following is a quote taken from the Australian Senate Inquiry into Corporate Tax Evasion in Australia report:
    “Parliament of Australia
    Parliamentary Business – Senate Committees
    Chapter 2
    A persistent problem
    2.13 Clearly, tax minimisation was a major driver in locating a company’s headquarters and distribution hubs in
    low tax jurisdictions. But much to the committee’s chagrin, the companies would not broach the subject. In some cases, the answers to questions stretched beyond credibility. For example, Airbnb (a US company) ventured that it set up its international office in Ireland principally to access talent:
    Mr McDonagh: We closed some of those offices because one of our core values at Airbnb is to simplify. It just
    was not effective to have all of those offices and all of those people.
    Senator EDWARDS: Why Ireland?
    Mr McDonagh: I think Ireland is important for a number of reasons.
    Senator EDWARDS: What is the No. 1 reason?
    Mr McDonagh: I would say that the No. 1 reason we located ourselves in Ireland was for access to great talent.
    Senator EDWARDS: Come on!
    Mr McDonagh: It is generally the head of our global operations.
    Senator DI NATALE: And the corporate tax rate in Ireland had nothing to do with it?
    Mr McDonagh: We do not make any long-term decisions for the business based on tax rates.
    2.14 Compared with the Australian corporate tax rate of 30 per cent, the corporate tax rate in Ireland is 12.5 percent but can be much lower, if not eliminated, through the use of structures like the ‘double Irish Dutch sandwich’.” Mc Donagh is head of Airbnb in Australasia.

    Airbnb would like us to believe that Airbnb rentals are mainly “Mums and Dads” who are renting out a spare bedroom in their home and earning under $5,000 per year which helps pay their bills.

    The reality is that the majority of Airbnb and other online disruptors advertise whole homes and apartments where the owner is absent. This reduces rental stock for those who want to permanently rent.

    Airbnb has conveniently forgotten to advertise that holiday letting id an illegal prohibited activity under the LEP and NSW Planning legislation.

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