Hotels urge government to force Airbnb to pay up

OTTAWA — Canada’s hotels are asking the federal government to take a heavier hand with online rental services such as Airbnb and force the platforms to collect and remit sales tax.

The Hotel Association of Canada has been lobbying the government for more than a year to make online rental services collect and remit sales taxes, estimating the cost of not doing so to be $100 million in revenues annually from Airbnb alone, not including other rental services.

Two provinces and several Canadian cities have already taken steps to regulate such businesses.

But while federal officials have been receptive to the idea and are “critically aware” that there is an issue they need to tackle, they are struggling to find ways to tax digital services, said association president Susie Grynol. “The government has a responsibility to keep up with the times and other governments around the world have done so, so it’s time for Canada to take some action as well,” Grynol said.

Pressure from domestic businesses has been building on the Trudeau government to apply sales taxes to online services providers such as Airbnb and Netflix, arguing that different tax treatments create an unequal playing field. Last week a Liberal-dominated Commons committee urged Ottawa to make online service providers based outside the country collect and remit sales taxes on as part of a series of recommendations to help Canada’s small businesses compete online.

The international trade committee’s report on e-commerce issues recommended the government apply sales taxes “on tangible and intangible products” sold through online platforms, and tax the profits from those sales.

During question period Monday, Finance Minister Bill Morneau said Canada was working with other countries to coordinate tax policies so internet giants are appropriately taxed.

Airbnb agrees to collect provincial taxes on short-term rentals in Quebec and B.C., and the company has previously said it would be willing to work with governments on further taxcollection agreements.

In the rest of the country, it is up to hosts to collect sales tax and provide it to the federal government. The company has partnered with the Canada Revenue Agency to increase tax compliance, last year providing statements of earnings and educational materials to its more than 55,000 hosts.

Airbnb spokeswoman Lindsey Scully said the company wants to pay its “fair share.”