Below is a response from State Government regarding the Short Stay Accommodation Levy. Daylesford Macedon Tourism will continue to advocate against the levy.
Here is a summary of our position, stated in a letter to the Premier:
- The levy should be scrapped, and a panel of experts should develop a new approach to managing the impacts of STRs, including supply-side reform such as regulation.
- Regardless of the above point, the levy is too high at 7.5% and should be between 3-5%, if the above point is disregarded and the policy is enforced.
- A greater proportion of funding should be allocated to social housing in regions.
- An allocation should go back to LGAs to offset the impacts of short stay accommodation and improve amenity.
- RTBs/VEPs should be provided with an annual percentage of the levy to offset the decrease in demand and spend though marketing and industry development.
- Clarity is needed with respect to the type of properties that are subject to the levy, ensuring that purpose-built accommodation, which doesn’t take housing stock out of the market, must be exempt.
Here is the response from the Treasury Department:
Background – what is the government doing and why?
From 1 January 2025, the Government will apply a 7.5 per cent levy on short stay accommodation to encourage more housing being made available for longer term rental and to contribute to social and affordable housing supply. The levy is proposed to apply to short-stay properties, including bookings for entire homes and shared homes (e.g., a single room in a house). The estimated revenue will be transferred to Homes Victoria to be invested in social and affordable housing options, with 25 per cent to be invested in homes in regional Victoria.
While short stay accommodation, such as Airbnb or Stayz, are a popular feature of Victoria’s visitor economy, they have reduced the ability for many properties to be used for longer term accommodation. There are more than 36,000 properties available for short stay in Victoria. More than 29,000 short stay accommodation places in Victoria are entire homes, which cannot be rented out on a fixed term agreement or used for longer term housing.
The 7.5 per cent levy is too high. Why has the Government chosen this number?
The levy will contribute to social and affordable housing in Victoria. The 7.5 per cent rate ensures that those who use their properties for short stay accommodation contribute to social and affordable housing. It is comparable to short stay accommodation taxes in other jurisdictions. This includes Amsterdam (10 per cent), Berlin (5 per cent), Toronto (6 per cent), and many jurisdictions across the US (who are generally greater than 10 per cent when including municipality, city and state taxes).
How much money will the new levy raise? What will it be spent on?
The levy is expected to raise around $75 million per year. The estimated revenue will be transferred to Homes Victoria, supporting their work in building, and maintaining social and affordable housing across the state. 25 per cent of funds will be directly invested in Regional Victoria. This revenue will be used to continue upgrading homes across the state, including ensuring that homes are safe, secure and fit-for-purpose by upgrading kitchens, roofs and guttering and other essential things that make a place feel like home.
Will the Government consult with industry and the community?
The Government is committed to consulting over the coming months, to inform the levy’s design and minimise any impacts on businesses and the community. This will include consulting on a technical definition of short stay accommodation, what types of accommodation should be liable for the levy, how property owners and booking platforms engage with the State Revenue Office, and other compliance measures.
Will the levy only apply to large multinational platforms such as Airbnb, and Stayz? Or will small businesses be required to collect and remit this levy as well?
The Government will consult with the community, businesses and local governments over the coming months on implementation of the new levy. This will include consulting on what types of accommodation that should be liable for the levy and how property owners and booking platforms engage with the State Revenue Office. These consultations will inform design of implementation and will aim to minimise any impacts on the community and businesses.
What is the expected impact on tourism?
The Government will consult with the community, businesses, and other affected stakeholders on implementation of the new levy. This will include engaging with booking platforms, local governments, and tourism bodies. These consultations will inform the design and will aim to minimise any impacts on tourism.
Will Regional Victoria be disproportionately impacted by the introduction of this levy?
The Victorian Government, including through its recent housing statement, is taken action to improve housing affordability right across Victoria. All revenue raised through the Short Stay Levy will be invested in Social and Affordable Housing through Homes Victoria, and 25 per cent will be directly invested into Regional Victoria.
Why are commercial hotel and motel accommodation exempt from the levy?
The levy is designed so that it targets the specific types of short-stay accommodation that can otherwise be used for longer term rental and housing options. Hotels and other commercial accommodation are specialised facilities that are solely built for the purpose of tourism and short-term accommodation. These facilities cannot be repurposed for longer term rental and housing options. As such, commercial hotels and motels are exempt from the short stay levy.
Will shared homes (e.g., a single room in a house) be liable for the levy?
The levy is proposed to apply to all short-stay properties, including shared homes.
Will people be double taxed on their Airbnb by councils and the State Government?
No. Local council charges on short stay accommodation will be removed as part of introducing this levy. This will ensure that a consistent tax rate will be applied across all local government areas in Victoria. The Government will engage with local councils to minimise any impacts on the community and to support local governments to manage the impact of short stay accommodation in their area.
Will this cause people to sell their properties?
The levy rate has been set to ensure that thousands of properties will continue to be available for short stay rental, but also in recognition of the challenges faced by those trying to find a longer-term rental accommodation.
Your levy won’t increase rental supply, why aren’t you regulating nights like NSW / the Greens want you to”?
A Short Stay Levy of 7.5 per cent on short stays strikes the right balance between encouraging more property owners to make their properties available for long-term rental, while recognising the ongoing need for short-term accommodation. Unlike a cap on nights, the Short Stay Levy will also support housing supply by contributing to social and affordable housing in Victoria