The Short Stay Levy Bill, which will come into effect on January 1, after being passed in the upper house, will impose an additional 7.5 per cent tax on accommodation provided by online platforms such as Airbnb with the government saying the levy would push thousands of short stay properties onto the long-term rental market.
Yarrawonga Mulwala Tourism and Business Executive Officer Noel Wright said that the levy will put holidays at risk.
“I think people are really doing it tough now. The reality is any addition to the cost of a holiday, like this short stay levy, is going to put the holiday at risk for the most vulnerable families,” Mr Wright said.
“This 7.5% levy is going to negatively affect visitor numbers to the regions with all the associated financial effects suffered by regional Victorian tourism-reliant businesses.
“This is both a financial and social outcome that most people just cannot afford right now.
“It is difficult to grow the regional visitor economy at the best of times, but it is really hard when the leadership group imposes reactionary revenue-raising levies in this way. It’s very disappointing.”
It is expected the tax could apply to up to 50,000 Victorian properties, with the government hopeful it will encourage investors to return properties to the long-term rental market.
The new tax levy will create a further burden on short stay home owners, many of whom hold these homes as investments and are already paying increased rates due to higher property values and more tax with the recent lowering of the threshold for land tax.
However, there is still uncertainty around how the market may react to the new tax with accommodation providers raising concerns about their ability to comply with the new tax, which will require self-reporting to the State Revenue Office.
Head of Public Policy at Airbnb Australia and New Zealand Michael Crosby said that regional areas throughout Victoria have a long history of holiday home ownership, and tourists greatly contribute to local businesses and jobs.
“Short-stay accommodation has always proven a popular choice among Victorian holidaymakers, as it caters for families and group travellers,” Mr Crosby said.
“Airbnb supports sustainable, evidence-based regulation. A statewide framework is preferable to 79 local councils coming up with their own approach to the same policy issues, which will hurt tourism by driving up the price of the family holiday.
“A 7.5 per cent levy, on top of increased council rates and restrictions on the number of nights property owners can list their homes, will harm the ability for Victoria to attract tourists to areas lacking traditional accommodation while penalising families looking for affordable travel options as cost of living pressures continue to bite.
“Airbnb has long advocated for a single, reasonable levy, paid for by the guest at the time of booking, that goes into affordable housing.
“We need to build more houses and this is a way to raise much-needed funds to do that.
“There is no evidence of caps or bans working - you only need to look to New York where we have seen short-term rentals effectively banned without any improvement in rental availability or affordability, while the cost of hotels has soared.
“It is important to get the balance right so the core issue of housing affordability is addressed, without jeopardising the economic benefits that flow from short-term rentals, with Airbnb contributing billions of dollars to the Victorian economy and supporting tens of thousands of jobs.”
Member for Northern Victoria Gaelle Broad has declared that there would be a destructive flow on effect to businesses, workers, tourists and communities.
“This tax is an absolute mess. It’s completely stupid,” Ms Broad said.
“The negative impact on small business will flow on to regional areas.
“Short stay accommodation provides valuable employment for locals in areas such as cleaning, gardening and general property maintenance.
“If there are less tourists, there are less people to spend their money in the local bakeries, butchers, supermarkets and petrol stations. The list goes on.
“This will also affect families and people with disabilities, whose choice of affordable, accessible holiday accommodation is already very limited.”
The Short Stay Levy will apply to all bookings made from January 1 2025, increasing the cost of short stay accommodation bookings, including farmhouse stays, Airbnb rentals, and other crucial accommodation options for tourists in regional Victoria.
Labor, the Greens, Legalise Cannabis and Animal Justice MPs all voted against exemptions for people with disabilities or fleeing domestic violence.
Ms Broad said the introduction of the tax on January 1 - halfway through the financial year – would cause major problems in itself.
“This is the peak holiday season in Victoria when businesses are already flat out,” Ms Broad said.
“There has been no consultation with industry. They are just lumping it onto them and expecting them to collect this extra tax without the time to put the necessary systems in place.”
Ms Broad said key details of the tax were unclear.
“I question whether the government is able to apply this tax, or will it be a repeat of last year when they tried to impose an unconstitutional tax on electric vehicles and had to repay the money with interest?
“The tax may raise up to $60 million in revenue but given we will soon be paying $1 million per hour on Labor’s debt, their annual return on this tax will equate to about 60 hours of interest.
“I understand this is the highest tax of its kind in the world.
“The government says this tax is needed to build more homes, but going on their recent record, they’ve been demolishing homes not building them.
“We already have such high taxes on property and the government’s policies are contributing to the housing crisis.
“This tax is a desperate attempt to find more revenue as they have driven our state into such massive debt.
“It will actually be cheaper for people to holiday in NSW than Victoria.
“Our tourism industry has already been kicked hard by COVID-19 shutdowns and this will compound the pain for our regional communities even more.
“The current government can’t manage money and - yet again - regional Victorians are paying the price.”
