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Victoria’s new “Airbnb tax” only benefits Airbnb

Victoria’s new “Airbnb tax” only benefits Airbnb
Tom Bacon

The Victorian Labor Government has announced a new 7.5 per cent tax on short-stay accommodation, being the first and only Australian state to do so.

The effect of this announcement is a body blow and a real kick in the guts to those apartment owners and residents who have been advocating for reform and regulation in the short-term accommodation sector.

Let’s not mince words here – the new tax does nothing to curb the popularity of Airbnb, nor does it do anything to improve the liveability of neighbours and owners’ corporations (OCs) that have a desperate problem with the noise and disruption of amenity that short-term stays bring with them.

The new 7.5 per cent tax will be passed on to guests staying in the accommodation. The tax is modest enough to not be too expensive to dissuade customers. Airbnb know this, as do the hosts. As does the Labor government. It will simply be business as usual.

What it does do is further legitimise and entrench the practice of short-term letting in Victoria for 365 days of the year.

The City of Melbourne had earlier announced a proposal to curb short-term letting, and to introduce a cap of 180 nights per year. Well, less than two weeks later the Andrews Government (and Airbnb) have swiftly acted to put that proposal in the garbage bin.

Just when public interest groups such as We Live Here had finally managed to persuade the council to suggest some serious reform in the area, and then Airbnb and now former Premier Daniel Andrews saw fit to intervene.

You have to feel for Airbnb at this time. Less than a month ago, the new laws in New York City to curb short-term letting had finally taken effect, leaving a devastating hole in the company’s revenue.

They had to act quickly, otherwise Melbourne might follow suit. Cue some frenzied lobbying to shore up support from the Labor Government, and poof – problem solved.

The Victorian Government looks great in announcing this reform – they get good headlines to rave about how “tough” they are on big business, and the feel-good factor of raising money for new social housing will provide a boost in ratings no doubt.

Meanwhile – Airbnb get what they want: stability. They get to know that Melbourne is open for business 365 days of the year.

Not 180 days of the year like it is in Sydney. Not like 180 days of the year, like it is in San Francisco and other parts of California. Not 120 days of the year like it is in Paris, or Barcelona.

Melbourne is the fifth largest market in the world for Airbnb. They can now watch the revenue roll in for decades to come.

 

It’s a classic win-win for the government, and for Airbnb. The only losers happen to be, well, everyone else.

 

So, did the Victorian Labor Government get played like a fiddle over this tax, or was it a joint approach?

We’ll likely never get answers unless there is an upper house enquiry into how this tax was rushed through in five minutes flat.

I’m sure there would be great public interest in getting to the bottom of how this happened.

I’m not holding my breath though. •

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