A former Tasmanian Liberal minister is calling on the Government to back away from regulating the so-called sharing economy.

Jurisdictions across the world are grappling with how to respond to the likes of Airbnb, which has captured 10 per cent of Tasmania's accommodation market.

Tasmania's Planning Commission is considering cutting the requirement for permits unless rentals exceed six weeks a year.

Visitation to Tasmania is growing, and the Government has a goal of drawing 1.5 million a year by 2020.

But former state Liberal minister and Airbnb host Peter McKay said the state needed share accommodation bookings to reach that figure.

"We're going to need every bed we can possibly get in Tasmania, and that includes the hotels and more Airbnb and more Stayz," he said.

"We will not be able to reach 1.5 million without the support of the community sharing in the tourist economy."

'Government should be cutting red tape'

Late last year, Premier Will Hodgman said he wanted the state to be the first to embrace the sharing economy and not kill it off through heavy regulation.

His Government's plan is to drop regulations for those who want to lease out all or part of their property for up to 42 nights a year.

But Airbnb wants the Tasmanian Government to follow the lead of South Australia, which does not apply such a cap.

"They wish to welcome tourists into South Australia so much that there are no caps, there is no differentiation between size of a property or different types of properties," Airbnb's Brent Thomas said.

"Tasmania is going second and we're encouraging them to look at the South Australian model."

Mr McKay agreed, saying the Government should drop their regulation plan.

"I don't know why they're moving into this regulated area, they should be deregulating," he said.

"They came to government to deregulate - let's deregulate, let's cut red tape, let people get on and share in the tourist industry."

But Planning Minister Peter Gutwein was confident the Government was on the right track.

"This will strike the right balance in meeting the need for tourism accommodation in Tasmania with the interests of existing businesses," he said.

Policing permits a problem

Tourism operator and former chief executive of the Tasmanian Tourism Industry Council, Daniel Leesong, said many of the council's members were also listed on Airbnb.

"One of the issues that we as an industry have is that there's many operators out there that haven't obtained planning permits and so they're really in contravention of the planning act as we speak," he said.

A number of property owners have received infringement notices from councils for failing to get permits, Katrena Stephenson from the Local Government Association said.

"Any accommodation business, a part of your house or renting a whole house needs a planning permit through your local council," she said.

Ms Stephenson said the association supported a relaxation of permit requirements where it was not a major commercial venture but was concerned about the proposal.

"It becomes much more complex to monitor where people are complying with requirements of the law and where they're not as opposed to the current situation where you have a permit or you don't," she said.

Ms Stephenson said councils could currently cross-check permits with websites but a 42-day limit would make it much more difficult to determine compliance.

The Tasmanian Government is expected to make a decision on how or whether to regulate the sharing economy later this year.