Victoria's New Policy To Levy 7.5% Airbnb Tax, Empowers Councils To Block Short-term Stays

The Victorian government has decided to introduce a 7.5% tax on properties listed on Airbnb and Stayz, starting Jan.1, 2025, and permit local councils to ban or limit short-stay accommodations.

The state government introduced a legislation on Tuesday, imposing a 7.5% tax, dubbed as nation-first levy, on revenue from short-term stays booked for less than 28 days through platforms like Airbnb and Stayz.

Secondly, the local councils and owners' corporations have been granted the authority to block short stay rental accommodation (STRA) in their area, reported The Guardian.

Primary residences, hotels, motels and caravan parks have been exempted from the short-stay levy.

With the new rule, the state expects to raise about AU$60 million a year, and use the additional funds for social and affordable housing. The government will spend 25% of the funds for regional projects.

Treasurer Tim Pallas said the reform aimed at getting the right balance in Victoria's mix of housing. "It is important we recognize and give a signal to the market that our priority is to get people into homes and long-term, secure rental accommodation is important," he said.

Airbnb had pushed for a 3-5% levy and asked to exempt private room bookings and other "budget accommodation" from the tax.

Michael Crosby, head of public policy at Airbnb Australia and New Zealand, pointed out that the state retracted on its promise to create a simple framework for the short-stay sector. He advocated for a statewide framework instead of a council-by-council approach.

"Airbnb has long advocated for a small 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," Crosby said. "However 7.5% is too high and will jeopardize the ability for Victoria to attract tourists to areas lacking traditional accommodation, and penalize families looking to travel as cost-of-living pressures continue to bite."

Eacham Curry, senior director for government and corporate affairs at Stayz, said the bureaucratic complexity will affect tourism.

"These changes will undermine the original purpose of the levy; to raise money for social housing initiatives, and risks creating bureaucratic complexity that will drive away tourism dollars," Curry said.

Shadow treasurer Brad Rowswell criticized that the new legislation will drive away people from the property market, adding that if elected the opposition will roll back the policy, reported ABC News.

"Taxing more is not going to get a roof over more people's heads," Rowswell said. "I think it will lead to more people leaving the property market, it'll lead to property prices being more unaffordable."

While the government estimated 36,000 STRA properties in Victoria, private firm Urbis reported nearly 50,000 homes.

Victoria Tourism industry Council chief executive Felicia Mariani said the government did not consult them before rolling out the new policy.