Airbnb issues: In US short term rentals may see FTC probe. In BC, hosts ineligible for gas PST exemption.

Globe and Mail Airbnb growth in Vancouver, 11-Jul-2016As staff at the City of Vancouver study the issue of online short-term rentals such as Airbnb, with a report to Council expected in the fall of 2016, The Hill reports today that there are growing calls for the Federal Trade Commission to probe commercial websites such as Airbnb. See excerpts and link below.

In Metro Vancouver too, short-term rentals break the law and are suspected of causing trouble for an already-tight rental market. See for example “Airbnb puts squeeze on renters, affordable housing, environment” (Allen Garr, Vancouver Courier, March 2016). Or “Cities take aim at Airbnb: Airbnb and other short-term operators are being blamed for reducing housing for renters” (Sunny Dhillon, The Globe and Mail, 11-Jul-2016).

Also, many British Columbians may not know this: Hosts of short-term rentals such as Airbnb are breaking tax laws if they take a Provincial Sales Tax (PST) exemption on their gas bill.

Suppliers like FortisBC collect PST on their natural gas accounts on behalf of the government, and must also conduct regular audits to comply with BC’s Provincial Sales Tax Act. To be eligible for an exemption, natural gas at any property must be used only for residential purposes. If natural gas is being consumed for commercial purposes (including any short-term overnight accommodations, such as hotels, motels, lodges, resorts or other buildings that provide short-term accommodations for less than 30 days) it is subject to PST. See example of FortisBC online claim form here for its customers.

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Warren joins call for Airbnb probe” (The Hill, 13-Jul-2016).

Excerpts: “In order to assess the use and impact of the short-term rental market, we need reliable data on the commercial use of online platforms,” wrote the senators in a letter to Federal Trade Commission (FTC) Chairwoman Edith Ramirez. “We believe the FTC is best positioned to address this data gap in an unbiased manner and we urge the Commission to conduct a review of commercial operators on short-term rental platforms.” … Critics have accused Airbnb and similar services of not doing enough to police operators who use their platforms to run larger-scale commercial lodging businesses, as opposed to individuals simply putting their home or room up for rent. The lawmakers are asking the FTC to investigate the scope of this practice on home-sharing platforms.

On one hand, these firms have sparked innovation, increased competition, and have provided new means by which our constituents can earn extra income,” they said.

On the other hand, we are concerned that short-term rentals may be exacerbating housing shortages and driving up the cost of housing in our communities.”

The FTC is in the midst of an examination of the on-demand economy, a loose term encompassing businesses that let Americans buy goods and services with a tap on their smartphone screens, including home-sharing platforms. Their guidance on the sector, which will be nonbinding, was initially expected earlier this year but has yet to materialize. The lawmakers said they hope that the FTC will gather data and include it either in its report or as a stand-alone product.

Meanwhile, battles continue to rage around Airbnb, which critics allege restricts housing availability and drives up rental prices. New York Gov. Andrew Cuomo (D) is currently considering whether to sign a bill that would limit activities on home-sharing services, and the company just sued San Francisco over new penalties for when its hosts do not register with authorities.

under a probe

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