The Adrian Loveridge Column – Airbnb Should Be Taxed Like Other Businesses in the Sector

According to various media reports the controversial alternative home renting portal, Airbnb has already signed over 300 regulatory tax collecting agreements worldwide.

Bearing in mind the cash strapped situation our Government finds itself and the recent imposition of yet more taxes, which according to private sector spokespersons have further dampened spending and any hope of stimulating the economy, it is difficult to understand why our politicians have been so reluctant to follow the lead of these 300 other countries or territories.

Among the latest to sign-up and agree to collect tax contributions is the Mexican state of Quintana Roo which include the tourism popular beach destinations of Cancun, Playa Del Carmen and the Riviera Maya. Airbnb claims 73,000 listings in Mexico which includes 6,200 hosts representing 10,000 rooms in this particular state.

The regulation sets a 3 per cent state lodging tax, the first in Latin America, on all Airbnb facilities taking effect on 1st October 2017. Between the 6,000 plus offerings in Riviera Maya and another 4,000 in Cancun and Isla Mujeres, state authorities report that 270,000 tourists stay in Airbnb locations each year in Quintana Roo for an average of five nights in groups of three persons.

This latest regulation is the second to be implemented in the country after an identical agreement was signed with the capital, Mexico City, in July. The National and Bloomberg reported ‘that this new Airbnb levy equals what Mexico City hotels pay in taxes’.

We have some pretty big numbers in Mexico’ said Nathan Blecharczyk, Airbnb’s co-founder and chief strategy officer, who has a quoted personal net worth of US$3.8 billion, reported The National.

Home-sharing is very popular there, (Mexico) and the local Government is excited about the benefits we can bring’.

So to repeat the question I raised earlier, why is our administration so reluctant to follow the example of over 300 other largely tourism driven destinations to generate taxes which could help reduce the country’s crippling debt, while at the same time being so agreeable to granting unilateral tax concessions to singular players who have yet to add a single new additional room to Barbados and compound this by selling off other taxpayers assets at below market prices to others?

What is particularly irksome is that while this tiny minority of people are benefitting from the majority’s efforts and fiscal contribution, they are avoiding (and some may say evading) taxes that the rest of us are forced to pay in increasingly burgeoning amounts.

This, while at the same time that our outstanding (over 4 years) due and payable VAT returns remain unpaid, which in effect is propping up those paying little or insignificant amounts of taxes. In our own case, tens of thousands of Dollars are owed, without beneficial interest or penalties and it is difficult to imagine, it’s just our small business that is being victimised.

This can hardly be an exemplary model for encouraging small businesses to survive or possibly flourish. Government must finally understand that the only way we can hope to emerge intact from our current perilous financial position, is to assist practically those who could make all the positive difference.

42 thoughts on “The Adrian Loveridge Column – Airbnb Should Be Taxed Like Other Businesses in the Sector

  1. Adrian:
    I agree that a tax on AirBnB, is possibly a good idea. However how would it be collected? What type of bookkeeping would be required of someone renting out a spare room in their house? Since they are now paying tax on the income derived, would they be allowed to claim expenses against the income. How is the collection and record keeping be enforced. Is the income received equal the expense of receiving it. Will it apply equally to those actually running a commercial enterprise renting out property as to those trying to supplement their income by renting out a spare room. The devil is in the details!

  2. Hi Adrian,
    How is it that in advocating that “AirBNB should be taxed like other businesses in the sector” you don’t mention that it would cut their VAT from 17.5% all the way down to the sweetheart deal of 7.5% VAT that hoteliers get?

  3. Robert, as I understand Airbnb collects the tax (in most cases) at the point of booking and then they pay to the tax authority (Government).

    Peter, our tourism industry is an export industry collecting valuable FX and therefore be treated as such. I would be happy that Airbnb attract the same level of VAT as existing hoteliers, villa etc.

  4. The tax would be collected by the listing agents (i.e. AirBnB, HomeAway) when the accommodation is booked . . . and paid into government before the property owner sees it.

    It can work.

  5. I am glad, Adrian, that you are willing to treat AirBnB fairly with respect to VAT, but that does not answer my query as to why you left this salient point out of your article. In fact, you lumped the hundreds of AirBnB hosts into the same corrupt company as Stewart and Bjerkham. I understand that you are resentful over unpaid VAT refunds and the like, but you are letting your personal issues blind you to the fact that AirBnB is a huge positive influence on the future of tourism in Barbados. It allows hundreds, and in the future thousands, of ordinary Bajans to have a viable entrepreneurial stake in the industry.

    • Adrian your postion is understandable. The rise of the AIRbnb is not surprising post CWC2007 when Barbadians were encouraged to remodel structures that led to increase in BNB room stock. The return on this investment is outstanding! The state of the market makes it a good fit.

  6. Adrian and PLT

    are shortsighted. AirBnB is a threat to the tourist trade.

    Why? A few decades ago, the government spent a lot of money on a hotel classification program because it realized that poor quality hospitality services can severely damage the brand appeal of a destination.

    Most tourists dont know what they are buying when they make a booking. Given the shamefully low standard of care in many Bajan homes, exposing thousands of tourists to the underside of Caribbean life could further undermine the already tarnished Barbados brand.

    What are you thinking?

  7. @ Chad99999

    On one hand you’re suggesting that Barbados has a high standard of living:

    “Chad99999 August 27, 2017 at 8:03 AM #: You wouldn’t know it from reading the remarks of Caswell and Bush Tea, but WORKERS in Barbados ENJOY ONE OF THE HIGHEST STANDARDS of LIVING in the AMERICAS.”

    But on the other hand you have concluded that those same Barbadian workers who enjoy “one of the highest standard of living in the Americas” are living in dilapidated houses:

    “Chad99999 September 4, 2017 at 12:10 PM #: Given the SHAMEFULLY LOW STANDARD of care in many Bajan homes, exposing thousands of tourists to the underside of Caribbean life could further undermine the already tarnished Barbados brand.”

    You never cease to amaze me………… it seems as though you are “purposely provocative.”

  8. Artax

    Do you know the difference between a woman who makes $2,000 a month and takes pride in keeping a clean and beautifully furnished house, and a woman who makes $3,000 a month and keeps an untidy home with dead cockroaches at rest among dirty dishes?

    Good luck on the GRE exam, if you ever take it.

  9. AirBnB is best suited to tourism in wealthy countries with a sophisticated middle class, not poor countries full of people who think they are classy, but aren’t.

  10. I would think those offering to rent their house or part thereof are sophisticated enough to realize the standards that are expected. A recent perusal of listings on AirBnB would attest to that. If you do not measure up, you will not be in business for too long.

  11. Yes Artax, he is that : “purposely provocative.”

    His remarks re Bajan AirBnB hosts is an absolute nonsense as a close review of the many listings would attest.

    It is inherently absurd to suggest that if you are competing with folks across the region for that intrepid traveller who loves that local touch and feel on his/her excursions and moreover you are also wary of receiving adverse reviews that could crimp your future rental income that you would offer a pest infested property.

    That said AirBnB must be regulated in economies like Barbados. By all means let the entrepreneurial spirit flourish but it’seems to everyone’s advantage to have a robust and well ordered system of rentals.

    These disruptive processes can indeed gravely impact the industry and thus the multiplier economic benefits attributed to it…. we must ensure there is beneficial economic coexsistence.

  12. Chad99999 said “the government spent a lot of money on a hotel classification program because it realized that poor quality hospitality services can severely damage the brand appeal of a destination.”

    So apparently he thinks that government regulations and bureaucrats are the right way to ensure quality control in the accommodation sector. AirBnB thinks that actual customer feedback directly to prospective customers is right way to ensure quality control in the accommodation sector.

    In Chad99999’s world if a business is not up to snuff some government bureaucrat sends a strongly worded letter months or years after the infraction. In the AirBnB world the business is kicked off the platform within hours.

    AirBnB, 1: Chad99999, 0.

  13. With the typical carelessness of West Indians, some people take one look at current AirBnB listings, pronounce them satisfactory, and then make a positive judgment about all AirBnB listings from now until eternity — based on a single snapshot of evidence. What is the IQ of the average West Indian?

    Even assuming the current listings are not lethal to tourism, what do you think will happen when more and mote people decide to make an extra dollar by renting the servant’s room to unwitting visitors?

  14. Chad stop being the waste end of a previously useful piece of papyrus ….

    The rules of demand and supply will apply between renter and traveller for the servant’s room or a nice apt in St George or Charnocks. You get what you pay for and complain vehemently when you don’t.

    No one is immune to the power of nasty reviews for false advertising on social media…no one.

    AirBnB will discharge hosts from their site for simply inflammatory, xenophobic or racist rhetoric…. it thus makes no sense to suggest that unsuitablely advertised accomodations will survive more than one visit….unless the traveller WANTS to sleep in a maid’s quarters.

    You are making no sense here.

  15. Dribbler

    Has complete faith in AirBnB’s internal controls, but the government would be foolish to follow suit. The horror stories about this outfit are all over Western media.

  16. @ Chad99999

    is a bluffer who has a way of intellectualizing even shiite to make it appear as though he is a “bright boy.”

    Your earnings example is shiite and does not negate your illogical conclusions of AirBnB. It is clear you do not know how the program works, but to demonstrate your penchant for being “simultaneously negative and stupid,” you had to mention something silly about accommodation initiative.

    Firstly, it is stupid to suggest that any and everyone could enter the program unregulated and offer sub-standard accommodation to tourists.

    Secondly, there is a database containing photos of the properties and full map listings are available on the website, giving potential guests the opportunity to search for a property that satisfy their requirements.

    In 2015 Airbnb raised $1.5 billion in funds that brought the value of the company to about $25.5 billion. This made it worth more than the Chicago, Ill.-based Hyatt Hotels Corp (NYSE:H) and the Parsippany-Troy Hills, New Jersey based Wyndham Worldwide Corporation, respectively.

    And don’t wish me luck, my friend………………. if taking the GRE exam means thinking irrationally, similarly to you, then I definitely won’t take it.

  17. @Chad99999 AirBnB’s internal controls may not be perfect, but they outperform government controls by a very wide margin.

  18. For all the blockheads out there, here is a cautionary tale from PRINCE EDWARD ISLAND, CANADA per CBC:

    Over the past five years, as more Islanders have started renting out their homes and cottages online, [the provincial government and] industry groups have launched several awareness campaigns to educate people about the rules. Some Islanders aren’t aware that before you can rent out your property as a tourist accommodation, you are required by law to pay a provincial licensing fee, and have your home inspected and water tested.

    Wood said if you’re caught operating without a license and refuse to comply, you will be fined. “It’s really very important these days because there are a lot of horror stories out there of people showing up, and bedrooms are in basements without [proper windows], and the place is filthy. And we don’t want that happening on P.E.I.”

    P.E.I.’s tourism minister Heath MacDonald told CBC in May 2016 he was concerned by the number of Islanders listing their homes or cottages without a license. At the time, of the 300 Islanders on Airbnb, 56 didn’t have a license. Now, that number’s dropped to 30, and most of them, said the department, are likely in the process of getting licensed.

    “I think we’re trending in the right direction,” said MacDonald. “We have communication going out on a daily basis to anybody on a site that’s not licensed that we’re aware of. And P.E.I.’s small so we do have an advantage. We have a captive audience when they’re on the Island, so we can get the message out.”

    MacDonald said ensuring Islanders are operating with a license is essential for tracking P.E.I.’s visitation numbers as well. As part of their licensing agreement, operators are required to report their monthly occupancy to the department.

  19. How many millions can a homeowner make renting out a room or two? People have been renting out their rooms long before Airbnb came along. Why tax peple who under the Vat are exempt from Vat if you make under $150,000.00 annually. So Tell me how can a home owner who rents a room or two to help make ends meet, can compete with Hoteliers???? Want to know how AirBnb has been happening a long time? Adult children, family friends from over and away. those who live at home and contribute towards the expenses will the homeowner be taxed too? This is whole lotta shite talk about taxing people who occasionally take in a boarder, local or foreign to help pay the expenses of owing a home on this over taxed island. With the internet you don’t need AirBnb to find guests. There are many websites offering homestays. Hoteliers see every fly as a threat to them! If they would give great service, fix and market their properties properly they will get results.

  20. @ Chad99999

    You asked: “What is the IQ of the average West Indian?”

    You answered that question by posting the “copied and pasted” to BU, which proves that you’re the real “block head.”

    All we are “saying” is properties SHOULD be REGULATED, as “de pedantic Dribbler” mentioned in his September 4, 2017 at 2:31 PM comment re: “That said AirBnB MUST be REGULATED in economies like Barbados. By all means let the entrepreneurial spirit flourish but it seems to everyone’s advantage to have a robust and WELL ORDERED SYSTEM of rentals.”

    In an effort to prove your opinion is correct, you “copies and pasted” to BU, an article which was posted to CBC News: Prince Edward Island on August 14, 2017 7:00 AM AT, entitled: “We’re making real progress: Number of unlicensed tourism operators dwindling on P.E.I.”

    However, your comments on the issue and the article were not only CONTRADICTORY, but DISINGENUOUS as well, because you “PURPOSELY FORGOT” to include:

    “Tourism officials on P.E.I. have SPENT TIME and RESOURCES TRYING to EDUCATE the public about the NEED to get LICENSED by the province BEFORE listing your property on sites like Airbnb.”

    You basically reinforced/substantiated “de pedantic Dribbler’s” opinion.

  21. You are wrong, blockhead.

    The point of the CBC story was to ratify my claim about AirBnB horror stories. PLT et al keep insosting AirBnB is self-regulating, which is not true.

    In an orderly, law-abiding, prosperous society like PEI, government licensing might work. In an impoverished, disorderly, corrupt society like Barbados, licensing would not work. Homeowners would evade the law in droves. Law enforcement would not be effective. Get it?

  22. talk about IQS Three people on this blog scored 100% on the MCAT test for college admissions……… got 32… one got 33 …and one got 35

  23. Chad99999

    It’s you who is the block-head…………. and a liar as well.

    It seems as though comprehension is not one of your strong points. The article you “copied and pasted” DID NOT describe “AirBnB horror stories.”

    It was about how unscrupulous people living PEI were exploiting the system and using websites, including AirBnB, to advertise their unregulated/unlicensed accommodations on-line and how the PEI authorities were perusing those websites, (including AirBnB’s), looking for those individuals to license them.

    “At the time, of the 300 Islanders on Airbnb, 56 didn’t have a license. Now, that number’s dropped to 30, and most of them, said the department, are likely in the process of getting licensed.”

    Where is the “horror story” in that data……….. where does it state in the article that guests’ accommodations and service (even those without licenses) were unsatisfactory?

    And what EVIDENCE do you have to SUBSTANTIATE your claim re: “Homeowners would evade the law in droves. Law enforcement would not be effective?”

    Perhaps if you were to post an article describing the inefficiencies/inadequacies of AirBnB in Barbados, it may support your argument. However, posting a Canadian related article as an attempt to paint AirBnB with negativity, is silly.

    Chad99999, you are a bluffer……… you may have bluffed your way through life, but BU is a very “hard nut to crack.”

  24. REPEAT: The point of the CBC story was to ratify my claim about AirBnB horror stories.

    Dummy, that does not mean horror stories are DESCRIBED in the particular article I posted, although there ARE Internet sites called “AirBnB Horror Stories”. Google them.

    It means that the article REFERRED to horror stories:

    “Wood said if you’re caught operating without a license and refuse to comply, you will be fined. “It’s really very important these days because THERE ARE A LOT OF HORROR STORIES out there of people showing up, and bedrooms are in basements without [proper windows], and the place is filthy. And we don’t want that happening on P.E.I.”

  25. Incidentally, Artax:

    My reading comprehension is excellent. I had a 99th percentile score on the GRE Verbal Exam AND a perfect score on the GMAT Verbal Section when I took those aptitude tests in graduate school.

  26. Horror stories, yes they do exist, on both sides. It appears however more often than not it is the person who is renting is the victim. There are literally millions of AirBnB rentals every year in the world. The number of “horror stories” are minuscule in comparison. This blog would be more readable if certain participants would stick with facts and carry on their personal vendetta’s elsewhere!

  27. The bluffer has once again tried to shift the goal post to appease himself, but has exposed his stupidity in the process.

    How can an individual who claims to be of “superior intellect,” present an article to “RATIFY a claim about AirBnB horror stories,” and subsequently ADMIT that it “DOES NOT mean horror stories are DESCRIBED in the PARTICULAR article,” but one has to “Google them?”

    And this individual brags about being intelligent.

    Yes, the article REFERRED to “horror stories,” but perhaps you may want to indicate where in the said article mentioned those stories were SPECIFIC to AirBnB. The article stated people use AirBnB to advertise their accommodations, some of which were not appropriate.

    Because AirBnB is a global initiative, obviously guests would come across substandard accommodations. I’m sure anyone who reads the reviews on Trip Advisor will be similarly confronted with “horror stories” about hotels, guest houses, apartments, villas, etc, some of which are rated accommodations.

    For example, a few years ago, after reading an advertisement of a known guest house I saw on a St. Vincent website, I decided to make reservations. However, when I arrived at the guest house, the conditions were far from what was advertised. I went to stay at New Montrose Hotel instead.

  28. Terry Hanton, Managing Director of Property Consulting Services.

    Hanton: We need to innovate

    Mon, 09/04/2017 – 12:00am Barbados1

    Terry Hanton, Managing Director of Property Consulting Services believes Barbados needs to innovate.

    He was speaking to the media at the launch of Beach View Villas & Suites in association with Altman Real Estate. Beach View Villas & Suites is an exclusive new development of 19 apartments which connects to the award winning Beach View Hotel.

    Hanton stated, “We need to innovate and have better value for money. If you look at the Caribbean islands, their currency is not as valuable as ours, they are often more competitive; their labour rates, utility costs are lower, etcetera.

    In terms of innovation, we need to think about other means of bringing people to the island more in line with additional amenities, whether it be theme parks, we need to be attractive to the market. Also Sports Tourism could be huge in Barbados. I was in Antigua and there are casinos closing down because there is not enough clientele to make them financially viable, so they have shut down, so casinos are not a necessity. If you think about it most of the cruise liners already have floating casinos and it is not a desired profit for long stay tourists.

    Barbados is an expensive place to get to. It is remote from other places. The strong market is the UK and if you think about where the sterling is now its difficult for people to buy. It is quite challenging from that perspective but we have to be a top notch destination as we can’t compete with cheaper destinations, so we have to niche ourselves in the top end.”

    According to him in terms of crime, “I don’t know that the upsurge in crime has had a significant impact. The bigger impact has been Brexit and the fall in the value of sterling, however there is potential for crime to have an impact in the future if it is not reigned in, but it has not had a significant impact to date.”

    However, he also advised, “There is clearly an uneven playing field, in that hotels have to charge VAT and Airbnb clients often don’t charge VAT. Airbnb are not registered with the Tourism authorities it is not subject to the same stringent health and safety requirements that are rightly imposed on other developments. We have to even our playing field and across the Caribbean various territories have been signing deals with Airbnb to tax them and regulate them and Barbados needs to do the same.” (NB)

  29. Hurricane Irma has shown scant respect to the Caribbean region. Irma’s shelf life as an entity will expire very shortly. In her wake she has posed the question: is the region making a terrible mistake in investing all of her energies into the tourist industry. An industry that pays little regard to the natural environment. Look at how we have trashed our coral beds over the decades. Coral beds protects the shoreline of our coastline Have you noticed over the years at how our beaches have receded? This is no coincidence. What about the number of structures that have being built or proposed – such as Hyatt – directly on our beaches?

    Let’s see how the region bounces back. It does not look very good.

  30. Terry Hanton is spot on. We badly need a leisure industry. Once tourists come out of the sea they need something of interest to do. People do not travel thousands of miles to dine in Barbados; they do not travel thousands of miles to smile at Bajans.
    It is a bit late for this government, but years ago I proposed the development of the South East coast of the island: a new leisure town at Seawell, with a three star hotel, boutiques, night clubs, restaurants, a piazza, a shopping mall, etc. All we have at present are two rum shops and a motor mechanic.
    This would be followed with a mono-rail running for the first part from the airport to Culpepper island where there will be a mini-theme park on land reclaimed between the mainland and the island. We have done that before.
    Instead we have allowed micro-developments at Sam Lord’s, Crane and the other developments by the Irish-Canadian.
    Such a development would not only make Barbados a weekend entertainment attraction for the growing middle class from down the islands, but it will be an added reason for tourists to spend money.
    I also proposed about three or four leisure centres geographically located across the island complete with swimming pools, concert halls, night clubs, cafes, bars, netball and basketball courts, squash courts, ten pin bowling, etc.
    Such a development, which can be built incrementally, will not only encourage Barbadians to spend more time out of their homes, but again will draw the tourists out after dark.

  31. Hal Austin: That all sounds wonderful! However do you honestly believe that it is practical. I am a tourist . I come to Barbados, for the beaches, the sun, not to go 10pin bowling or play netball, I can do that at home. I would suggest perhaps that the infrastructure be fixed, water , sewage, public transportation. I do not wish to be negative but where is the money going to be found? The government is basically bankrupt. Of course if it were feasible off shore interests would gladly do it and of course own a bit more of Barbados.

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