Travellers to Victoria Could Be Forced to Pay 7.5 Percent ‘Tourism Tax’

A woman browses the site of US home sharing giant Airbnb on a tablet in Berlin on April 28, 2016. JOHN MACDOUGALL/AFP/Getty Images

Short-term rental providers like Airbnb in the state of Victoria could soon be subject to a consumer levy of up to 7.5 percent, part of a new proposal to be presented to the state cabinet next week.

The levy will be an Australia-first and a major pillar in the Andrews Labor government’s housing policy, anticipated to be unveiled next week. Hotels are expected to be exempt from the levy.

Senior government MPs familiar with the plan suggest the revenue generated from Victoria’s proposed levy could be allocated to support the construction of social and affordable housing.

This may include backing the ongoing renovation of existing housing stock through initiatives like the Big Housing Build, as well as potential integration with other measures such as inclusionary zoning and more robust planning regulation.

Airbnb’s Response

Airbnb’s Head of Public Policy Michael Crosby was supportive of levies in principle.

“It’s important to note that the government has not yet made a final decision on its housing statement of intent and we look forward to continuing to work with the Victorian government on this important matter,” he said in a statement.

“Since last year, Airbnb has been advocating for tourism levies in Australia as a way for governments to raise funds from all accommodation providers to support housing and infrastructure projects, and we support the Victorian government in exploring this.”

While Airbnb supports the levy, they believe the 7.5 percent is too high and would have a detrimental impact on tourism, while giving hotels an unfair advantage.

“Airbnb supports policies that would help boost housing construction across the country, however, a 7.5 percent levy that applies only to short-term rental accommodation is too high, and would give hotels a free kick and create an uneven playing field,” he said.

“A rate that high could have a negative impact on the appeal of the state as a tourism destination, also penalising everyday Victorians at the wrong time.”

Mr. Cosby said a 3-5 percent levy would be fairer.

“We’ve worked with many cities around the world to make this visitor levy work, remitting over $10 billion AUD in taxes globally to support community infrastructure and housing projects. It’s worked across the U.S., Europe, and Canada and allows communities to share in the economic activity created by tourism more directly.”

According to Airbnb and a report from Oxford Economics, Airbnb contributed around $3.7 billion to the Victorian economy last year facilitating tourism throughout the state leading to more business for retailers, restaurants, bars, and cafes.

The 50th New Tax for Victoria

The state opposition said this was the 50th new tax (or tax increase) since the Andrews government won power in 2014.

Shadow Tourism Minister Sam Groth said it would add $100 to the cost of a weekend for visitors to the state.

“The Andrews government’s new Holiday and Tourism Tax will be the only tax on short-stay accommodation in Australia. This will make Victoria a less attractive destination for international and interstate visitors and threaten the $5 billion spent each year in Victoria alone on overnight accommodation,” he said in a statement.

The property industry, including the Property Council, Housing Industry Association, Urban Development Institute of Australia, and Master Builders have pushed the government to do more to release greenfield land for housing, rather than target short-stay accommodation.

The Epoch Times also reached out to Visit Victoria and the Victorian Tourism Industry for comment.