> One reason that short-term rentals have been cheaper than hotels is because hotels had to collect and pay sales tax while Airbnb didn’t.
Seems like this isn’t a new tax from out of nowhere to disadvantage Airbnb but rather a policy designed to bring Airbnb in line with their peers.
It reads like Airbnb was put at an artificial advantage as compared to hotels because hotels had to charge sales tax. Now everyone does. Seems fair to me. What seems unfair is that they weren’t subject to this the whole time. Honestly surprised it’s not retroactive.
> was put at an artificial advantage as compared to
That makes up most of the "disruption" lately. Companies discover that they can exploit some legal loophole by claiming "but technology" and get an upper hand over classic competitors.
By the time they're forced to follow the same rules, or (less likely) the law is relaxed for everyone else, they already have a healthy head start and can either claim that they're being treated unfairly, or that they're better than everyone else.
I never said (or meant only) "tax loopholes", Uber may even end up paying more tax than taxi companies. But taxi companies have a far, far higher bar in the eyes of the law. In most countries you can't just decide to climb in your private car and provide commercial transportation service. You have to spend a lot of time and money to get there, authorizations, commercial insurance, driver certifications, etc. Uber bypassed it by saying "we're a tech company" and left it to the drivers, making the enforcement of the law a lot harder.
Hotels also have higher requirements than an AirBnB host but the company says "we're just the tech platform". Just look at conflict resolution and what kind of leverage and protections a client has when dealing with a hotel vs. dealing with a private renter to see the massive gap that comes attached to that "disruption".
Because that's the thing, you could have short-term renting in the past but that wasn't an alternative to hotels. AirBnB made it a hotel alternative so that's the benchmark. Same with Uber, you could (legally) hitchhike in the past but Uber made the service a taxi alternative.
Imagine Google "disrupting" the state/national/federal identity registry, as in become the equivalent of the passport or identity card issuer while offering Google-style support and SLAs. Some services are important enough to be regulated, this is what today's disruptors are bypassing.
The solution to an industry being crap isn't to allow someone to bypass existing regulation, it's to create a set of effective regulations that can be applied equally to everyone.
> Uber bypassed it by saying "we're a tech company" and left it to the drivers, making the enforcement of the law a lot harder.
The original loophole that Uber used was San Francisco’s different regulations between taxis and limo companies: The latter are less regulated but are allowed to accept prebooking, and not street hails. Uber realized that ordering a ride via a phone app is more convenient than trying to hail a passing taxi in many cases and can be served by a limo company instead.
Not very familiar with the situation across the pond but in much of Europe the expectation from companies providing commercial transportation services are far higher than just booking method:
- Drivers need a different, more expensive license or attestation that needs to be renewed periodically;
- Car needs a more expensive commercial insurance that covers all passengers and cargo, to a much higher payout, not just the driver like most Uber drivers have;
- Car needs to be inspected far more often to ensure it's roadworthy and can stand that driving regime for the future;
- Prices are regulated because the taxi service is seen as closer to public transport than to personal one. So you don't see price fluctuations more than you'd see for the bus;
- They need an authorization to serve an area (meaning they were checked according to local regulation);
- The company is responsible for its employees in many ways;
- And more.
A restaurant's kitchen has higher requirements than your private one which makes owning and operating a commercial kitchen far more resource intensive than a private one. There's no "kitchen sharing" where you can sell food straight from your private kitchen, "infirmary sharing" where you can pretend you're a doctor or a hospital room, or "legal office sharing" where you can pretend to be a lawyer without meeting all the requirements imposed on those sectors.
This is the loophole Uber exploited. Replace "car" with "house/room" and you get AirBnB. When they had enough of a head start they started complying with some regulation, while still acting like they're a different kind of service for what other regulation is concerned. They want to live on the border and pick and choose what applies to them, something no other commercial service is allowed to do. Except all the other disruptors who raise enough money to afford some fines while they still operate in a grey area. Cost of doing business.
These are per-city rules in much of the US, but the limo companies that Uber was originally subcontracting to had to meet similar requirements in San Francisco as what tou describe. Booking is just the test that was used to determine which set of regulations apply to any given compan. For example, taxi supply was artifically constrained by a medallion system, but there was no such limit on the number of limos allowed to operate.
(Past tense b/c I don’t live there anymore and am not up-to-date with current developments)
They certainly have used the loophole you describe extensively, but that started later, once they were sure there were no repurcussions for the limo dodge.
Uber didn't only become big because of the success in the US. When they scaled their operations, they had enough capital to disregard local laws (Berlin comes to mind), where they simply paid the fines with the capital it had raised, allowing to create a brand and household name. Thats what allowed them to become common everywhere; now that they are regulated, they have quasi no advantage over any ride sharing (even taxi) companies.
This is why fines should increase for repeat offenders to the point where they quickly become unmaintainable as "cost of doing business". They should also always be higher than the estimated profit generated by the offending behavior.
> There's no "kitchen sharing" where you can sell food straight from your private kitchen, "infirmary sharing" where you can pretend you're a doctor or a hospital room, or "legal office sharing" where you can pretend to be a lawyer without meeting all the requirements imposed on those sectors
I definitely remember someone trying the kitchen one. Forgetting the name of that startup now, but it's been tried.
And given how badly America treats health care and law, I suspect the other two are in stealth mode right now.
I'm sure startups will try anything if they think they can make some money out of it. So do investors. The problem is such an endeavor just has to make more money that you put into it, not necessarily be a sustainable or above board business. They're not disrupting the sector they operate in, they're disrupting the way they can operate outside of the law and be agile enough to not get pinned down by it.
They'll try something, squeeze as much money as they can from wherever they can, see if "the cost of doing business" is low enough that they can even pursue the shady business model as a standard operating procedure, or else at least survive and grow until they can go semi-legit. They will rely on the fact that authorities have inertia so it takes time until someone catches up to their shenanigans, investigates them, comes with a decision, then they can fight for a while, delay the inevitable until they they're cornered, restructure their operations a bit, and the chase starts again. Companies like Uber are still shady businesses that in many countries operated outside the law for more time than they operated within its boundaries. But they gave deep pockets and where there's money, there's a way.
Not that much different from organized crime businesses that start off as being one stop shops for anything regardless of law and regulation, and may eventually be spun out into semi-legitimate businesses with more or less above board practices.
The one I'm remembering had people "host a dinner" that you had to pay to get into. And somehow that made it not a restaurant, so you didn't need to have a commercial kitchen (hint: this isn't legal).
Kalanick's recruiters reached out to me about CloudKitchens and I straight up said that no, I do not want to work for that guy.
It appears that CloudKitchens explicitly caters (no pun intended) to restaurants and commercial kitchens. So establishments already ostensibly having all the required authorizations according to existing regulation. There's no part that seems to encourage private individuals to start delivering food from their personal kitchen.
Uber for a long time did exactly that. Saying "we're just a tech company" is like ThePirateBay, YouTube, or The Silk Road saying "we just store and transfer blobs of unidentified data between completely anonymous users". You are responsible for what happens on your platform especially if you are encouraging people to break the law by giving them tools explicitly for this and paying them. They could have easily asked "upload evidence of x, y, z which allows you to provide the service in this particular geofenced region".
> But taxi companies have a far, far higher bar in the eyes of the law. In most countries you can't just decide to climb in your private car and provide commercial transportation service. You have to spend a lot of time and money to get there, authorizations, commercial insurance, driver certifications, etc. Uber bypassed it by saying "we're a tech company" and left it to the drivers, making the enforcement of the law a lot harder.
Let's be real, most of it is getting a taxi medallion (sure you need a different driving license but any 18 years old can get it).
Posted it in an other thread [0] but do we really want to go back to the medallion system? Pre-Uber, either the driver rented the car to a middleman who rented the medallion from a rich owner, or said owner was selling and financing (most banks won't touch these medallions!) a medallion at a ridiculous interest rate to a driver that planned to use it as his retirement savings (an extremely volatile asset and not very liquid).
The more I spoke to cab drivers the more it seemed their industry was a pyramid scheme aimed at helping established rent-seeker take advantage of often poor new immigrants. Uber brought a breeze of fresh air: Someone could simply buy a car, calculate the depreciation and it's value on the market (since unlike medallions cars are relatively liquid assets!) do rideshare and calculate their profits or loss. They can get out of the game at anytime, and they know exactly how much they are going to get for the car they have should they sell it.
Also, the argument on Uber/Lyft drivers not being contractors since they can't set their own rates and decide which ride they take strikes me as weird since medallion drivers were contractors, had to charge the price set by the city and could only pick-up customers in the (arbitrary) zones covered by their medallions.
And I'm not even touching the usual pain points and often discriminatory practices of medallion drivers (refusing card payments, refusing rides to non-white passengers and to non-white neighborhoods...).
The problem here is you failed to identify the regulations as the problem in the first place, especially with Taxi's and Uber
The regulations created an artificial scarcity for transportation that increased prices, and lowered quality of service to the point where people were BEGGING for a service like Uber to come along
The solution to this problem is not "make Uber follow the tax regulations" which seems to be what you are suggesting
That's the kind of explanation you get from anyone breaking the law and claiming it was because the law not conducive to the greater good. Every regulated sector could get the same characterization from entities failing to meet said regulation making all of it in effect invalid. Uber has deep enough pockets to lobby for changing regulation but that would apply to everyone and they would again have to fight on a level playing field. They broke the law for profit.
Robbery is illegal even if you steal from a criminal, or if people are BEGGING for someone to do it. Sure, when it's a social movement it's still breaking the law but has a different moral value. As it stands the value now is in Uber's pockets.
> The solution to this problem is not "make Uber follow the tax regulations" which seems to be what you are suggesting
No. Not only did I literally start my comment with <I never said (or meant only) "tax loopholes">, I also ended it with:
> > The solution to an industry being crap isn't to allow someone to bypass existing regulation, it's to create a set of effective regulations that can be applied equally to everyone.
I'm trying to assume good faith but replying to me while completely ignoring the content of my comment or twisting my words to imply the exact opposite of what I said is disrespectful and disqualifies your opinion in my eyes at least. Pretty sure also in the letter and spirit of HN's guidelines. Makes it seem like you don't want to be part of a conversation but rather throw your personal ideas out there everything else be damned.
You can sort of make a moral argument for Uber, maybe others in that one of the problems with the legacy taxi services is that they would refuse to provide rides to minorites, blacks in particular. With an artificially constrained supply of taxis, they could do this without penalty, possibly even profitably.
With Uber, sure an individial driver can decline a ride based on the destination and assumptions he makes about the passenger, but it's far more likely that someone will take the ride, since there are many more drivers. They also have less to fear with Uber since they don't carry cash or deal with cash payments, and there's some level of trackability/identifiability of the passenger in comparison to picking up a random person on a street hail.
>>claiming it was because the law not conducive to the greater good
No, I never claim the greater good, that is what people that support government and regulations claim.
We need all these laws, regulations, taxation, etc "for the greater good"
Anyone that claims to be doing something for the greater good chances are is evil.
>>Robbery is illegal even if you steal from a criminal, or if people are BEGGING for someone to do it.
Some how I bet you would not agree in all situation, income taxation as an example...
That said, I do not place much stock in an argument "well that's illegal", as an Individualist libertarian I assess things based on the ethical foundation of liberty or the principle of self ownership..
So I base my support or rejection of a public policy, law, or regulation based on that ethical foundation. I do not outsource my thinking to a legislature.
>>I'm trying to assume good faith but replying to me while completely ignoring the content of my comment or twisting my words to imply the exact opposite
I was not "completely ignoring" your content, it seemed to me then, and continues to be my belief now based on this further comment that you desire increased regulations on Uber to make them fall inline with existing regulations, to "close the loop hole" as it were
This is in stark contrast to my belief that the regulations are the problem and adding regulations to uber is not the solution to the problem
Eliminating regulations on everyone is the solution.
Is the classification as an employee, with attached benefits, artificial scarcity in a negative sense? If so, we got quite a few industries that would also love to remove this "artificial scarcity" and allow the use of day labourers.
Many taxi drivers, like uber drivers, are also classified as Independent contractors
Employment classification was not what I was referring to, I am talking about the endless regulations around taxi medallion system that puts a government regulated cap on the number of taxi's
There are taxi owner/operators, but since the owner cannot drive 24/7, and since the cost of a medallion is more than one can afford by working only 8 hours a day, most (all?) of them sublease their cars to several drivers in shifts. That way the car and medallion can be producing income around the clock. Those subcontracted drivers are not employees of the taxi company, they might be considered employees of the car/medallion owner but if they work for several different owners, maybe they are considered independent.
>>Alright, but that's not the case in the majority of the places where Uber have
I would love to see your source on that, most cities with any kind of taxi system have some permitting or medallion system that limits the number of taxis
> I would love to see your source on that, most cities with any kind of taxi system have some permitting or medallion system that limits the number of taxis
It's an assumption because the medallion system is very US-centric. Permits/taxi drivers license, if that's what you mean, isn't much more than a minimum qualification requirement and not a hard limit.
> Do you view this as a negative? because I do not
Yes? Because that's a ~100 year regression in most developed nations and I empathize with the people on the receiving end of that kind of hat-in-hand relationship. To not see this as a negative suggests to me a worryingly low empathy with the less fortunate and perhaps even nostalgia to a strict class-society, because that's the end result of a race-to-the-bottom unfettered capitalism.
So your position is that Day labor and/or independent contracting is only predatory?
That people are incapable of looking at a situation and making a choice for themselves if the situation is good for them or not? They must always be protected by the government "for the greater good", and that government regulation is inherently good and noble?
Really?
because after the state of CA passed a law prohibiting independent contracting for a whole host of jobs, many lost 100% of their income, many others lost flexibility in the jobs and other adverse consequences from moving from Independent contracting to employee
Many people PREFER to be independent as it affords them flexibility and well independence they could not get if they were employee's
it is foolish and ignorant to claim that I have "low empathy with the less fortunate" simply because I prefer less authoritarian government, less regulation and more personal freedom (and responsibility)
> So your position is that Day labor and/or independent contracting is only predatory?
Yes, especially when the primary USP is just to lower labour costs compared to having them as employees.
> That people are incapable of looking at a situation and making a choice for themselves if the situation is good for them or not? They must always be protected by the government "for the greater good", and that government regulation is inherently good and noble?
Yes. People in a shite economic position and without any support from a welfare state are rarely in a position to refuse an exploitative relationship.
And yes again, the government is most likely far more "good and noble" than an employer in day labourer relationship - whose primary motive is not one's well-being but profit.
> because after the state of CA passed a law prohibiting independent contracting for a whole host of jobs, many lost 100% of their income, many others lost flexibility in the jobs and other adverse consequences from moving from Independent contracting to employee
A lot of people would lose their job in the insurance industry if universal health care was adopted. But it's still the right thing to do. Furthermore, the only reason why you can use that argument "Ah, it's horrible! They're losing their income!" is because there's no welfare state to help them out in between jobs and/or (re-)education.
> Many people PREFER to be independent as it affords them flexibility and well independence they could not get if they were employee's
Maybe some, sure. Not sure why that's relevant or mutually exclusive to not regress to day labourers.
> it is foolish and ignorant to claim that I have "low empathy with the less fortunate" simply because I prefer less authoritarian government, less regulation and more personal freedom (and responsibility)
A hand-in-hat existence has absolutely nothing to do with freedom, if anything it's its opposite. Freedom for capital, or market freedom etc, does not automatically translate to freedom in its literal sense to the willing or unwilling participants.
The boss is usually the most authoritarian relationship that most people experience from day to day, worsening the less fortunate one are. This would only increase the intensity of that.
>>A lot of people would lose their job in the insurance industry if universal health care was adopted. But it's still the right thing to do.
No it really is not. but I also do not want to diverge in a debate over healthcare policy and how government run healthcare is not the Utopia people like you make it out to be, nor how many of the advancement in care the world enjoys is funded by the US Health system (which is one of the reason the US health system is so expensive) and if the US does go to be Government Run Single Payer we will see a HUGE decline is health care advancement worldwide
>>A hand-in-hat existence has absolutely nothing to do with freedom, if anything it's its opposite.
This is factually incorrect and ignorant of how these economic regulation actually impact the poor. Most of the time it causes business to fold, and the bottom rungs of the economic ladder to be removed, limiting options and forcing an ever increasing number of people in to poverty and into the welfare state. Which is then use ironically to justify more regulation which causes yet more people in the poverty and the welfare state, this cycle repeats over and over, and over again
Government regulations have NEVER lifted anyone out of poverty, free market capitalism does not, and only free market capitalism
There clearly isn't much ground for a constructive discussion here with that kind of dogmatic market fundamentalism. Pretty much all of what you wrote is trivially refutable by just comparing the US to other western-European nations.
Western Europe has more of a welfare state than the US, but they are still capitalist economies. They also depend on the US for many things, including but not limited to defense and world stability in particular. The "utopia societies" many see there have only existed since after end of World War II, and are directly tracable to the US provision of those things. Take a look at eastern Europe in the 1970/80s to see what a full-on welfare state looks like.
The contradiction is your belief that the US way of doing things is bad, while enjoying stability and advancement given to you by the US.
If the US pulled out of the European Theatre and stopped "world policing" like many in the EU (and the US) would like, then it would not be long before most of the EU was speaking Mandarin or Russian, and the EU can not stand alone with out the US backing both Militarily and Economically
the "western-European nations." you wish me to compare the US to would fall in about 3 seconds with out US backing, and their Large State Welfare systems would collapse
>Airbnb: we don't need to own hotel properties and employ managers and housekeepers
Fyi because this is a common misunderstanding: Hotel chains like Marriott, Hilton, Four Seasons, etc also do not own most of their physical properties[1]. They are primarily management companies instead of owning a portfolio of real estate. If you see a Hilton logo on the side of a building, it doesn't mean that Hilton actually owns it. The logo is there because they have a long-term contract to manage the hotel for the real owners of that property.
>Amazon: we don't need to own retail stores or inventory
Amazon isn't a totally "virtual" company. Amazon owns (or leases) physical distribution centers instead of retail stores. They've always paid sales taxes based on nexus of those DCs. What's recently changed (circa 2017?) was collecting sales taxes on behalf of 3rd-party marketplace sellers.
> Airbnb: we don't need to own hotel properties and employ managers and housekeepers
This is correct for AirBnb, but incorrect for the value chain. Someone must have the flat on their balance sheet. Someone must have a cleaner lady on a payroll. Is Airbnb value chain more effective that hotel value chain? Maybe. Maybe not. But for AirBnb host having a tax advantage of not being charged as a tourism business while in fact being one was clearly an advantage.
Similar laws have been passed all over the world, including the US where it goes by a city or a state, Las Vegas being notable.
Can't think of any, but it's still fair to say that tax loopholes (and lack of other regulations that the established competitors are subject to, e.g. Taxi licenses) provide an additional advantage...
Nevertheless, all these are legitimate things if viewed from a different perspective.
As a driver I like to have a platform to list my own services an independent way at instead of applying for a job at a transportation company. And as a passenger I like to be able to hire an individual driver. I don't want a taxi company nor the Uber company, just a private individual + a convenience website where I can find one.
As a traveler I don't want a fancy hotel, let alone a shitty one - I prefer a decent room or a bed in an ordinary private home.
If only Uber and AirBnB were just doing their job connecting individuals rather than trying to conquer the markets for themselves I would certainly be on their side.
>As a traveler I don't want a fancy hotel, let alone a shitty one - I prefer a decent room or a bed in an ordinary private home.
I think that's a generally minority position though. For the most part, people prefer their own room, bathroom, and possibly kitchenette/sitting space. Along with flexibility about checking in and out. Not always of course. Sometimes you need to adapt if you're off the beaten path. But I'm pretty sure that if you surveyed most people, especially business travelers, they're not really looking for a spare room or bed in a private home.
But I believe there is enough no-hotel people to consider this an option worth existing.
Same thing with transportation: a significant portion (if not the majority) of people would prefer to be serviced/employed by a serious company yet many drivers prefer to freelance and many customers prefer real people over corporations.
In fact I myself mostly use classic taxis and hotels but I understand the value of being able to choose the other model.
My reading of that article was that tax liability hasn’t changed at all. The Airbnb hosts were always liable for paying all of their taxes, including whatever sales taxes they were liable for. This change means that Airbnb are now responsible for collecting that sales tax and paying it to the government on behalf of their hosts.
Whatever opinion you have about that, it doesn’t seem to be addressing any sort of loophole. It’s not a new tax, it’s just a new regulation for collecting it.
Didn't Amazon also avoid collecting sales tax in the US until recently? I think they didn't have to collect sales tax on any cross-state transactions (tax is owed at the point of delivery). Whereas brick and mortar stores almost never make transactions with their customers across state borders.
According to Wikipedia [0] they only had to collect sales tax in all states since 2017 after some "Amazon laws" were introduced? That sounds later than I expected.
Really the relevant Supreme Court case was Wayfair which required sales tax collection (overturning Quill) for all businesses over a certain revenue(?) in 2018. [1] Sales tax collection was sort of an Amazon-specific patchwork by state previously. (And, yes, in general buyers were supposed to pay a usage tax on out-of-state orders but most individuals almost certainly did not.)
That wasn't unique to e-commerce though. Pre-internet, if you ordered something from a catalog and the seller was out-of-state, they did not collect sales tax. It was up to the buyer to report and pay the tax, which of course nobody did.
>>> I think they didn't have to collect sales tax on any cross-state transactions
That is not how it worked (or works), in the US Sales tax is owed by the consumer, just like income tax. Amazon nor any other retailer "owes" the tax, they collect it on your (the customers) behalf and submits it to the state. In fact most states pay the retailer to do this as they get to keep a small part of the collected tax.
Before some TERRIBLE court rulings in 2017, Sales tax was required to collective if your business had a "legal nexus" in the state which generally meant you had a physical location in the state you were required to collect sales tax on the sales you made to consumers of that state, so even "cross state" shipments had to be taxed if you say had a office in that state but your warehouse with the goods was in another state
If the sales tax was not collected by the retailer, you the consumer were suppose to pay the tax yourself, most states have a self reporting question on your states income tax return form.
Many people did not do this, so the states started passing laws attempting to "close this loop hole" aka the Constitutional Power grated to the federal government to regulate interstate commerce
Sadly the Federal Courts are TERRIBLE at applying the commerce clause of the US Constitution in its plainly written meaning, as they allow the federal government to use it regulate completely intrastate commerce (which should be unconstitutional) and now (as of 2017) allow the states to regulate interstate sales which also should be unconstitutional by allowing states for retailers that have no Nexus in their state to collect sales tax on sales to consumers in the state
This is also why Amazon, Walmart and others are pushing for Congress to come up with a Interstate Sales tax regulation to override the patch work for some 3000 taxing jurisdictions that make up the US sales tax regulations
Fixing a bad law is fine, but you can't propagate that back just because you wish you'd thought of the edge cases then. Or at least you shouldn't, if you have any sense of fair play...
Legislative changing laws, that should definitely not apply retroactively, even if sometimes this is very painful.
Executive fixing application of laws that haven't been applied correctly in the past however is an entirely different story. If laws oblige you to pay taxes you are obliged to pay wether they have been collected or not. Not much different from a crime being a crime wether you are caught or not. Unless of course there's also a law that states an equivalent of "taxes not collected within the first $n $timeunit are waived".
Depends on the jurisdiction, but most wouldn't put this on the consumer. In most jurisdictions, if a merchant neglects to collect sales tax when the sale is made, it's out of their pocket - not the customer.
In Canada ex post facto laws are prohibited in the charter of rights and freedoms for criminal matters only - and this isn’t an absolute prohibition either. They are permitted for civil matters.
It’s an interesting thought exercise, and fairness would in my sole opinion be based on whether they knew they should have been paying the whole time and were getting away with it. It won’t happen, though.
Tax law is what's written in statutes, but it's also how the courts interpret the law. This means there's stuff that's clearly lawful, stuff that's clearly unlawful, and then a grey area where reasonable people can interpret the law in different ways and we need the courts to rule.
This works well when you have cases that go to court. But some tax authorities prefer a light-touch or right-touch regulatory approach, and so they prefer to persuade people to pay tax that's owed and they leave court cases for the blatant offenders. That means we don't get the case law.
Is legal in Canada. I'm honestly surprised it wasn't applied here, because it's clear that tax should have been paid by analogy, even absent a direct law.
In Canada, businesses are exempt from collecting GST/HST if the business makes under $X per year. This feels sensible and reduces paperwork and things to think about when starting up, but is a clear example of how AirBnB was skirting the rules by treating each renter as a business. They should have been collecting GST/HST from the start at the platform level.
In the UK they already add VAT to their commission fees, which is what Airbnb is "selling" e.g. if you pay £100 for a stay in a UK-based short let, Airbnb's fee on that might be £15, of which £12.50 is their fee, and £3 is 20% VAT. £85 is held in trust for the host, and passed on direct.
So Airbnb's income on that transaction is £12.50, not £100.
Hosts do sell their properties on multiple platforms, and their income determines whether they have to register for VAT. In Canada it's apparently $30,000 per quarter, in the UK it's about £85,000 per year. So lots of Airbnb hosts don't currently have to pay VAT.
$X is $30,000CAD FWIW. The exemption is helpful for getting off the ground as it's one less thing to think about, even though in reality charging (and filing) GST/HST is not very onerous.
I was almost evicted since my landlord wanted to make more money with Airbnb. Before that I've already heard of cases how in tourists towns the local poorer population wasn't able to get long term apartments because richer tourists filled them through Airbnb.
Airbnb is cancer for the local population in any country that isn't very rich because locals & students then have to commute from further distances.
So banning Airbnb would be godsend for the local population of many countries, if you want to make money with renting open a hotel.
Obviously there is the argument "I own the apartment so I can do whatever I want". I really have no good counter argument for this as it is true. But all laws are really relative to the culture. This same person could then say "I don't owe the country any taxes because _I_ made the money".
So this just goes to show that we "normalize" everything based on laws.
For the greater good of the local population in poorer countries Airbnb should be banned.
If you think of it as a You vs Landlord negotiation, indeed, the landlord is permitted to do whatever he wants such as not renting to you because he has a better offer elsewhere.
If you think of it as Society vs Landlord, there are many reasons that Society can give to justify preventing the Landlord from Airbnbing. Such as, society has a duty to provide housing to locals, airbnb guests make residential areas more dangerous, dirtier and noisier, other standard reasons why businesses are not permitted in residential areas.
If these reasons trump the positive impact on the region from encouraging tourism, then, regulating airbnb makes sense.
Yeah, it turns out that property rights come into conflict with human rights a lot, and this is why property rights should not be fundamental.
The people in responses saying owners "should" be able to do anything with stuff they own - well, the owners of property certainly think so. What about the majority of the population? I expect people's opinions about this will change rapidly, in a radical left direction, when the COVID eviction and foreclosure wave hits the US.
I have a good friend who is a Law Professor and we had a pub conversation about the concept of "property ownership" a few years ago.
It was really mind blowing- I had never really thought about how abstract the notion of property ownership actually is, especially when you factor in inheritance. We should definitely be more critical of political systems that seek to justify concentrating property in the hands of the few.
It's a pretty crazy thing. An interesting question for libertarians is where did private property originate? Like, taking libertarian assumptions, once you own it, hypothetically you can expand your property profitably. But how did the first resources and land, which before private property were all used more or less collectively, become privately owned?
Right? Its pretty crazy. And extrapolating further, you can show that the concept of private property is what necessitates tax, since the modern state is in large part an apparatus for enforcing the concept of private property. Therefore libertarian complaints about taxation quickly fall apart under close scrutiny.
The question I posed, with 2 very clear answers, is: should property rights or human rights be supreme? I know what I would say in the common case of a poor person being evicted.
A big issue with property rights is that one person using their property can harm other users indirectly.
As such, it makes a lot of sense to curb property rights.
Humans not having property seems to be the premise on which this whole society is built. Why else wod people work at eg Walmart? Because they really like greeting people and stacking shelves?
The resolute defenders of property rights would argue that this infringes on the rights of those who already own the things including virtually all land.
But there are other issues with this like the massive, inescapable trend towards centralization of ownership under capitalism.
I think it’s more complicated than that. While it does lead to higher rents, it also leads to more visitors and tourists who spend more at local establishments. Those places hire local people.
So there is an argument to be made that it helps with jobs, higher pay, and retail establishments in the area as well.
This does appear to be a good argument on face however it's not guaranteed that tourists do in fact spend more at local establishments. Furthermore, is an economy boosted by tourism stronger or are there just a lot of low wage jobs available? These kinds of questions should be answered by rigorous study not economists or travel lobbyists.
How much greater the tourist spending is versus the spending from locals? Which were displaced. As those displaced locals won't be spending money any more at local businesses.
The thing that sucks is that a lot of the publicised grievances are always with the demand side, and never the supply aka the home owners. Since they are richer or something, denying them side income or filling an empty room that would otherwise go unused is supposed to be a loss they should stomach, not to mention the savings/ better experience for the renter who doesn't want a hotel experience.
And yes, there are lots of serial property owners who run lots of homes on Airbnb but I really don't think regulation can be nuanced enough, at least what's been proposed.
> Since they are richer or something, denying them side income or filling an empty room that would otherwise go unused is supposed to be a loss they should stomach
Quite simply, yes. If this were all it was, nobody would have a problem. The issue is short-term rentals taking over reliable lease stock. Landlords can make more money with less downside renting out one weekend a month than an entire month, so why wouldn't they? So rental properties simply vanish from the market at key price points.
If everyone had a home that they owned, I would not have a problem with airbnb. But this is not the case, and we have no intention of making this the case, so as long as we have obligatory renters, we can't have this incentive.
Personally i'd rather there just be more housing so the market can balance out.
Like in theory, all things being equal, long term rentals should be much better for the landlord. You don't have to worry about vaccines in the downtime, you dont have to clean/etc between tenants, you have less regulatory concerns (in theory), long term tenants have incentive to be respectful to neighbours and not destroy the place.
But there is just more demand for short term. Personally i would rather there was just more housing in general (maybe that's naive).
There are definitely some nice things about staying in an airbnb other than costs - having a full kitchen, having a bit more "room" [especially if travelling in a group], usually being in an area near things like grocery stores and less near generic tourism BS.
> Personally i'd rather there just be more housing so the market can balance out.
to build houses there is a need for a underlying infrastructure (roads, electric grids, gaz pipes, whatever...). Who's going to pay for all that when often existing ones are barely maintained?
Now cities could have more skyscrappers to house more people as well... but there is a lot of NIMBY involved as well, it's a complex subject.
I'm not opposed to Airbnb as long as they are subject to the exact same standards and laws as hotels, in dedicated buildings for instance. Obviously, very little hosts would want that.
Airbnb'ing an appartement can drastically affect the quality of life for neighbors as well.
Taxation is a interesting thing. In some countries those utilities like roads and their upkeep is paid from income taxes. And Airbnb renters don't pay income tax. Maybe it would be reasonable to move that burden to be a tax on such renting. With long term rentals the income tax isn't a problem.
In most of the big airbnb markets, it is assessed via Property Taxes.
City taxes may make up a portion, but if you break down where the money goes, it usually is schools, and emergency responders, not per se utilities, easements or roads.
> to build houses there is a need for a underlying infrastructure (roads, electric grids, gaz pipes, whatever...). Who's going to pay for all that
For a new development, the developers pay for it, either by actually installing the infrastructure themselves or by paying "connection fees" to the utilities to establish the service. For a truly "greenfield" development they also build the roads, which may stay private or be turned over to public ownership.
Ongoing, the gas/water/electric customers pay for maintenance as part of the cost of the service.
Where I live, the only utility persistently moaning about cost of maintenance and infrastructure is the water/sewer service, which is run by the city. Gas and electric are private utilities and they seem to just deal with it.
Taxpayers! That is what a government is for after all.
To be clear, i think airbnbs should be subject to appropriate taxes in order to pay their share of that sort of thing.
I'm also not sure why this would be such an issue with airbnb relative to normal long term rentals. Its not like an airbnb uses roads & electric grids differently than a normal tenant.
> I'm not opposed to Airbnb as long as they are subject to the exact same standards and laws as hotels
Why not the same standard as BnB's or traditional short term rentals of small dwellings? Its not like hotels have ever had a monopoly on short term rentals to tourists.
If other people want to pay more for your place, why should that place's owner be forced to let you pay less than they could make with someone else?
Seriously. What is better about you, other than that it is you?
"Long-term is better for the community" may be an argument that I can get behind re: a tax, but that's not worth very much at all. Maybe a couple hundred a month in a good location? Less in a poor one.
They do own the fuckin apartment. They should be able to do whatever they want with it, within reason. Go pound dirt may be right.
> They do own the fuckin apartment. They should be able to do whatever they want with it
I live in a condo building where there is a HOA rule where leases of less than 12 months are forbidden. I'd never live in a building where AirBnBs were allowed. Similarly cities can ban or severely regulate short term leases if they want.
That's assuming that property rights are absolute. Maybe that is the case in your country, but that's definitely not true everywhere.
And it's not just countries that might have a hint of socialist nuance: even the USA wouldn't accept if you buy a ranch and then declare that on this property only the laws of the PRC apply (or that you declare it part of the UK). There are limits to what ownership allows you to do and those limits are very much subject to legislation.
AirBNB asked for a bailout back in March 2020. The blog post makes it sound like there was a cause and effect, but this is just the government normalizing things across the country.
I think (well, I hope) that Airbnb understood that request would go nowhere. Airbnb is politically radioactive in Canada, any government percieved as "bailing out" Airbnb would likely suffer consequences at the ballot box.
I suspect Airbnb instead made the request to placate underwater hosts during the start of the COVID tourism crash - they had to be seen as doing something.
Still an incredibly scuzzy and tone-deaf ask, but put in context, I sort of get why they did it.
The bigger news from this budget update is that Netflix/Prime avoided a 'Cancon tax', where they would be forced to make more Canadian content for the services, funded by an added levy on consumers in the country. We dodged a bullet there, I certainly don't mind these changes.
I'm old enough to remember when CanCon was brought in to broadcast TV and radio. Lots of business owners whined loudly about having to not import cheap second-hand culture from foreign places and how it cut in to their personal wealth generation capacity. There was a bit of a rough transition (cough Beachcombers cough) but eventually the investment paid off with interest.
I wouldn't resent a cultural development fee. It helps maintain a virtual wall across the southern border to protect our delicate assets.
Is it really effective across all media? Canadian radio is awful IMHO because of CanCon rules: there aren’t enough Canadian artists within a specific radio genre to saturate a station’s quota, so in many cases we end up hearing the same artists repeatedly throughout any given day.
That was the argument used 50 years ago. It hasn't been true for about 40 years. Unless your genre is "American pop artists" or maybe "Italian renaissance original instruments".
To me it sounds a little ridiculous to have the taxpayer subsidize... entertainment.
I mean, it's one of the most lucrative business on earth. If Canadian content producers want people to watch their content they should just... make things that people want to watch? Worked fine for pretty much evert major studio out there.
Very audacious. Looks like their approach was to illustrate the financial difficulties of the Canadian hosts and ask the government of Canada to help those people out. Classic situation where the lion's share of the financial risk is held by thousands of individuals instead of the central company, and this is probably what also let them avoid certain taxes in the first place.
Canada still has an exemption for small suppliers not to pay sales tax, so this provides a strong incentive for those to find ways to take bookings outside of Airbnb.
Does an owner-operated web site count as a "digital platform"? What about a centralised telephone booking service?
Or does it just mean "anything that's big enough to be targeted as one entity by government"?
It seems clumsy to tax the booking method rather than the supply itself, but maybe it's a matter of practicality for tax collectors.
I don't think this is such a bad thing. If AirBnB's role of the relationship isn't worth the premium you pay to cover taxes, that's a pretty strong argument that AirBnB isn't really providing much value and we'd be better off without a middleman in this relationship (I think for what it's worth that this probably isn't true, and people will happily pay 5-15% to be able to deal directly with AirBnB)
Airbnb already charge VAT (in the UK at least) on the host service fees, i.e. the 15% of the transaction they keep for themselves.
So Airbnb already charge for their service, and they're taxed on it.
What's new is taking GST (or VAT) on the accommodation too, which is normally paid over to hosts direct, and who have to remit VAT only if they were over the "small trader" threshold (in the UK that is not many).
How did the title of the HN post change? I originally posted "Airbnb asked Canada for a bailout. Canada slapped Airbnb with a tax." It's now "Canada to apply GST/HST to short-term rentals booked online"
Probably changed by a moderator because they considered original one clickbaity. About new title: as a Canadian I am well aware what GST/HST is but might be worth changing back to the generic “sales tax”.
It's just unbelievable to consider that Amazon, AirBnB etc. have been so successful due to tax irregularities, and of course, when at scale, they G and A can doe this via Dublin loopholes etc..
When bureaucrats are searching for ways to make money, and they always all, for god's sake why don't they go to the obvious places first?
We also have to consider how much our subsidized postal systems are really just subsidizing one form of business over another.
> When bureaucrats are searching for ways to make money, and they always all, for god's sake why don't they go to the obvious places first?
Because some of their friends also benefit from these loopholes, though at a smaller scale I imagine. The whole "stupidity/malice" addage has always been a euphemism for "corruption" in my book. There is an insane amount of potentially taxable money and a lot of states dearly need that money, especially right now.
> We also have to consider how much our subsidized postal systems are really just subsidizing one form of business over another.
Yeah, but you could say that for roads as well, or any utility none of these businesses helped create and from which they profit. That's why taxation exists at first place. Imagine Amazon having to build/maintain their own roads to deliver parcels...
I'm a bit more lenient with Amazon from an ethical perspective. Airbnb, Uber and co, deliberatly violating local laws with their illegal taxis/hotels on the other hand, and the shear inability for governments to crackdown on these services... not because founders are geniuses, because VC money helps exploit justice systems. I can assure you that if I were to launch a bootstrapped Airbnb like service in my home country I'd be shut down in a week and probably jailed...
"Yeah, but you could say that for roads as well, or any utility"
No, roads are socialized, not subsidized.
We socialize them because it would be impossible otherwise - each road represents a kind of 'single access point'.
Package delivery - other than possibly ensuring packages are delivered to remote areas - does not need to be socialized, and probably not subsidized.
Farming - again, absolutely not socialized, because it would be absurd for our governments to be running all of our farms - but - there are strategic subsidies because 'on the whole' we want to make sure certain crop availability (and for other reasons).
We subsidize entertainment: want to make a movie in Canada? You get tax breaks.
There's no reason at all to allow for skimping out on VAT for most online services.
And FYO with respect to 'looking for tax loopholes' - don't discount the ineffectiveness of the bureaucracy. We are 10 months into a pandemic, and the PM of Canada, just 2 days ago, the PM of Canada was zooming with a Big Tech CEO about some cool ideas for 'Apps with Contact Tracing' and other things that they have absolutely made 0 progress on. Compared to places like Taiwan and S. Korea and their very active operational engagement of COVID, sometimes I wonder how the mail actually does get delivered.
There is more to Airbnb's success than just a better deal than a room. Something that makes little sense is that a 200 room hotel, let alone the hotel industry, should be able to crush Airbnb on price in any local market. The Airbnb operator has little operational efficiency, aside marketing and IT (provided by Airbnb) in comparison. Taxation (my hometown taxes rooms at 17%) might be some of it, but it seems much larger than that.
1) Canada post is a crown corporation and is effectively subsidized [1]. It's existence is guaranteed, it effectively cannot go insolvent, as such it receives considerably better terms of business than otherwise. And more.
2) "its a business that enables other businesses"
Almost all businesses 'enable other businesses' - this is absolutely not a reason to subsidize package delivery.
In fact, it's the opposite of a reason.
If there is a reason, it's to ensure some kind of common mail delivery particularly to remote outposts.
What is this thread, a branch of /r/LateStageCapitalism? People, who are not aware that the questions they raise were answered centuries ago, are philosophastering about their "solutions".
Canada still hasn't put out a budget. Their "Fall economic update" explains why there is no budget. Their deficit is $381 billion. Yet they are talking about socialized childcare?
To be clear, Canada's total debt that built up since the 1980s is ~$750 billion. In 2020 alone the deficit of an equivalent of 20-30 years of government debt.
Who is to pay for all this spending? Well it's simple. We can look to our largest industries. Mining/Oil/Gas is actively being harmed and can't even afford themselves. Manufacturing was destroyed by christia freeland. Government taxes destroyed bombardier which is now being sold off. Little to airbus, little to alstom.
So we know exactly who is left in Canada to pay the bills. FIRE. Finance, Insurance, and Real Estate.
Finance are the ones who get to handle and manage the debt. So let's be realistic, Insurance and real estate left. Oh right, record low interest rates, possibly going negative. Real estate is being propped up by the government trying to prevent explosion.
I guess Insurance will be the one holding the entire debt?
"Today [2018], per-capita Canadian federal debt is equal to US$13,588.51. In the U.S., the same figure is nearly five times higher at $67,000 per American."
Seems like this isn’t a new tax from out of nowhere to disadvantage Airbnb but rather a policy designed to bring Airbnb in line with their peers.
It reads like Airbnb was put at an artificial advantage as compared to hotels because hotels had to charge sales tax. Now everyone does. Seems fair to me. What seems unfair is that they weren’t subject to this the whole time. Honestly surprised it’s not retroactive.