Bid to stop tax on Airbnb has setback
Airbnb’s and Uber’s chances of derailing a proposed law change that would require them to levy GST on Airbnb stays and Uber rides appear to have suffered a setback.
Airbnb said it could not attend a select committee hearing at which it would have had the chance to make its case against the law change in person and to answer questions from MPs. Michael Crosby, Airbnb’s head of public policy in Australia and New Zealand, said the company had been given only one date to give evidence to the committee when it was not possible to attend.
Under the tax bill unveiled in September, digital platforms providing ride-sharing, food and beverage delivery, and short-stay and visitor accommodation will have to levy GST on bookings made through their platforms.
That would change the current situation, under which the likes of Uber drivers and Airbnb hosts are responsible for levying GST on their services themselves, but only need to do so if they are over the $60,000 revenue threshold at which businesses need to register for GST – which most are not.
The way sales taxes are applied to the gig economy has become a hot topic internationally as fears have mounted among tax authorities that more firms may avoid sales tax and get an unfair edge over traditional businesses by structuring themselves as only as being a middleman.
PWC tax partner Eugen Trombitas said in September that New Zealand was the first to propose certain gig economy firms should be responsible for levying sales taxes booked through their websites.
Inland Revenue has estimated the change would bring in an extra $47 million a year in tax, but Trombitas believes the actual figure would top $100m.
Crosby criticised the consultation process for the tax bill in his letter to the select committee, saying Airbnb’s inability to attend was largely because of the timing of the consultation period as well as an ‘‘abrupt change in hearing dates due to the extended sitting of Parliament’’.
‘‘We have concerns about the truncated consultation timeframes. The speed of the consultation process is of concern,’’ he wrote.
He said more than 300 Airbnb hosts had provided submissions to the select committee, ‘‘speaking out against the bill’’.
‘‘Common themes included concerns about our hosts’ abilities to combat the rising costs of living, concerns about the GST status of their family home and confusion about how the bill would work in practice,’’ he said.
The Government’s assumption was that ‘‘a group of independent people all selling on the same platform is akin to one large entity, with the potential to erode the GST base’’, he wrote.
But Crosby said it would be more appropriate to view Airbnb as being ‘‘like a collection of individuals selling goods in a market’’.
‘‘If a group of vendors collectively at a market sell more than $60,000 worth of goods as a group, no-one would expect each individual vendor to pay GST if their individual contribution did not exceed the GST threshold.’’
The select committee is due to conclude its deliberations on the bill by March 2.