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Vacation Rentals Bill called a ‘tax grab’

Proposed legislation to tax and regulate people who rent their homes to visitors was welcomed yesterday by the Bermuda Tourism Authority.

But Michael Cranfield, of Vacation Rentals Bermuda, said the Vacation Rentals Bill 2018 is “alarming” to some owners of Airbnb-style properties and a “tax grab”.

Mr Cranfield added the Bill had “raised concerns”, as there was lack of clarity on how tax would be collected and how registration would be organised.

He said it was also unclear “what guidelines the minister will use in granting the annual licence to properties, or how long it will take him to decide”.

Mr Cranfield added: “Air arrivals already pay high taxes on their air tickets, and this just adds to the financial burden and the overall cost of visiting Bermuda.

“More than 50 per cent of an air ticket to Bermuda is made up of tax.

“Hosts feel that the new tax and the cost implication to the vacation rental tourist may turn visitors off and send them elsewhere.

“This in turn would be a threat to hosts who are using the vacation rental of rooms in their houses to supplement their income and to pay their bills, especially older Bermudians and Bermudians who live off the island.”

Mr Cranfield said there had been a lack of consultation with vacation rental businesses before the Bill was tabled as a “fait accompli”.

He added: “This shows in the lack of understanding of the business in the wording of the Bill.”

Mr Cranfield said vacation rental site Airbnb had told him that “Bermuda and Bermudian homes are among the best vacation rental hosts and homes in the world”.

He added the island boasted more five-star properties and vacation rental “superhosts” than “any other country that they do business in”.

Mr Cranfield said that vacation rental property owners felt that governmental regulation was “unwarranted”.

The Bill, tabled in the House of Assembly on May 18 and yet to be debated by MPs, was designed to impose a 4.5 per cent tax on vacation rental homes.

The units are defined as “any place, land-based or not, which provides sleeping accommodation for nine or fewer guests, for which a charge is made”.

The legislation would also change the definition of “hotel” from a place taking six or more guests to one accommodating ten or more. The owners of vacation rental units will also be required to obtain certification, as well as a “tourist accommodation licence”.

A BTA spokesman said the authority was “delighted” to see legislation introduced for properties that were “previously operating outside the law”.

He added: “The Bermuda Tourism Authority's ongoing dialogue with our partner Airbnb has convinced us this modest fee, paid by the visitor not the host, will have no impact on demand and we have their full support.”

The spokesman said, if the law is passed, the BTA would aim to work with online rental platforms to “make fee payment digital and seamless to both visitors and homeowners”.

He added the BTA was “pleased the Government is embracing vacation rentals” — unlike jurisdictions “seeking to constrain the growth of the sector”.

The spokesman said: “Although the proposal is revenue neutral to the Bermuda Tourism Authority — the BTA's government grant will be reduced by the amount of fee revenue collected — it means that vacation rental travellers will pay their fair share of the cost of destination marketing, just as hotel guests do. Plus it frees the BTA to actively promote vacation rentals as an option to visitors, just as it does for hotels.”

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Published May 31, 2018 at 9:00 am (Updated May 31, 2018 at 7:54 am)

Vacation Rentals Bill called a ‘tax grab’

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