Effective as of Oct. 1, short-term accommodation providers in B.C. have to collect and remit Provincial Sales Tax (PST) and Municipal and Regional District Tax (MRDT) revenues, intended as a way to level the playing field in the accommodation sector.
"The intention is to make this a fairer process so that people who are providing short-term accommodation are remitting the same amount of taxes (as other accommodation providers), so that's all good," explained Whistler Mayor Nancy Wilhelm-Morden.
Matt Hick, of accommodation listing service alluraDirect, said it's still too early to say what the additional 10 per cent in taxes—PST in B.C. is eight per cent, while the MRDT in Whistler is currently set at two per cent—will mean for local tourism. "I don't believe we're going to see that much impact (on pricing) over the next 12 to 18 months because everything has already been booked up," he said.
"We do need to keep an eye on it for the booking cycle next winter season. The predictions on that? It's unknown. It's really hard to predict it. Whistler is such a hot market that (you wonder if) 10 per cent is going to ... keep people from coming."
The shift in how the taxes are applied does raise a number of other issues, however, Hick explained. If a property is listed exclusively on a website like alluraDirect that collects and remits tax on the owner's behalf, not much will change. But for owners who list a property themselves, or through a website that does not collect and remit taxes, they will have to register to collect PST on their own. (The only exemptions are for properties not listed online that generate less than $2,500 in gross annual revenue and are not expected to exceed that amount in the following year, and for accommodations renting for 27 days or more at a time.)
That's where Hick sees a possible dilemma for the Resort Municipality of Whistler (RMOW): how to ensure the tax revenues it collects is coming from legal rental properties?
"The provincial government requires us to collect and remit the PST and MRDT for our clients. Unless we're confirming that all our properties are legitimate, the government doesn't know what we're submitting, so the onus is going to be on the companies themselves to do the honourable thing and only rent legal (properties)," he said. "That's possibly where the conflict of interest comes in: What happens when you have an extra couple hundred thousand dollars of tax revenue that's potentially coming from illegal rentals? How is that conversation going to go? It'll be interesting to see how this evolves."
Last year, the RMOW began requiring short-term rental properties in appropriately zoned neighbourhoods to have a business licence. Hick suggested tying the tax remittance to the business-licencing process as a way to ensure the revenues are coming from a legitimate source.
"To renew the licence, you would have to provide a certain chunk of information about the PST and MRDT collected last year. You tie it to the licensing in some form, so that both makes the licensing more important, but it also gives the RMOW quite a bit of information regarding each property. Who is actually renting out their Phase 1 property rather than living in it?" Hick said, acknowledging that that approach would come with challenges of its own, namely around privacy.
In response, Wilhelm-Morden noted that the province is responsible for ensuring compliance on accommodation tax remittance, "so we're going to see how they do with that and if there are gaps in that compliance process that we could fill with our business-licence process."
For more information on the changes, visit gov.bc.ca/assets/gov/taxes/sales-taxes/publications/pst-120-accommodation.pdf.