Renting an Airbnb or VRBO in Alberta will soon be more expensive.

The Alberta government plans to introduce details this week about extending its tourism levy to short-term rentals like Airbnb and VRBO.

A government spokesperson confirmed that details of the levy will be announced in Thursday's budget, but declined to provide further information citing budget confidentiality.

The levy adds a four-per-cent charge to any rental under 28 days, though most short-term rentals aren't included under the current guidelines.

Though specifics aren't outlined, the change is mentioned in the government's 2019-23 Fiscal Plan. According to the plan, the tourism levy change is expected to generate about $5 million in 2020-21. The tax will be charged through the service used to book the rental.

Currently, most short-term rentals are exempt, as only establishments with more than three bedrooms that can be rented separately are subject to the levy.

The government's fiscal plan said the levy was not designed with short-term rentals in mind and "gives these operators an unfair advantage over hotels and other accommodation providers that are subject to the levy."

The Alberta Hotel and Lodge Association has applauded the move as an important step in levelling the playing field

Other jurisdictions

If enacted, Alberta won't be the first province to tax short-term rentals. Both British Columbia and Quebec have taxes that are charged through platforms like Airbnb.

In Quebec, guests pay a 3.5-per-cent lodging tax on the cost of the listing for any reservation under 31 nights.

In B.C., there is a eight-per-cent provincial sales tax (PST) for the listing price (including cleaning fees) for reservations 26 nights and shorter. A municipal and regional district tax (MRDT) of two to three per cent is also applied.

On a municipal level, several cities in Ontario apply a municipal accommodation tax of four per cent to short-term rental reservations, among them: Barrie, Brockville, Greater Sudbury, Mississauga, Ottawa, Kitchener and Windsor.

Some Alberta cities have also begun to regulate short-term rentals. Both Calgary and Edmonton require short-term rental hosts to have a business licence to operate in the city.

'Pay our fair share'

Airbnb said it has been working with the provincial government on the addition of the tourism levy and the company hasn't been negatively affected by taxes in Quebec and B.C.

"We're proud to pay our fair share and help to promote the tourist economy," said Nathan Rotman, Airbnb Canada's deputy director of public policy.

According to Airbnb, there are about 12,000 listings in Alberta including rooms in homes, entire home listings, boutique hotels and traditional B&Bs.

Rotman said he didn't have the details on Alberta's plan for the tourism levy, but said B.C.'s model has been a "very successful tool to help promote the tourist economy in that province."

Nathan Rotman with Airbnb Canada says the online platform supports the plan to add the tourism levy to short-term rentals. (Manuel Carrillos Avalos/Radio-Canada)

Airbnb's provincial and municipal tax collection in B.C. was almost double what was expected and generated $42.9 million in one year, with $33.7 million of that coming from PST and the other $9.2 million from municipal and regional district tax.

'Catching up with other provinces'

Dave Kaiser, president and CEO of the Alberta Hotel and Lodge Association (AHLA), said extending the tourism levy to short-term rentals has been a long time coming.

"It's been a file we've been working on for several years and couldn't get any traction with previous governments here in Alberta. We're happy that it's finally happening, and in reality I think Alberta is catching up with some of the other provinces."

The AHLA provided input to the government about the tourism levy change and gave several recommendations. The association wants the restriction about the number of rooms removed and wants online platforms to collect and remit the levy on behalf of the properties. It also wants data collected from online platforms shared with municipalities.

Kaiser said the the AHLA has other recommendations for the regulation of short-term rentals, including one significant change federally: GST.

"Without GST and without a tourism levy, someone who is operating a short-term rental has a nine per cent tax advantage or price advantage on hotels."