3 Mar 2023

National claims Airbnb and Uber price hikes possible under govt's planned tax changes

2:40 pm on 3 March 2023
Deputy Leader of National Party Nicola Willis

National's finance spokesperson Nicola Willis says if all sellers have to charge GST, the costs will likely be passed to consumers. Photo: RNZ / Angus Dreaver

The National Party predicts consumers could pay up to 15 percent more for Uber and Airbnb if the government's planned tax changes are introduced.

The proposal is included in a taxation bill, which was yesterday returned to the House.

The bill would require digital platforms that offer accommodation, food delivery and ride-sharing to charge GST on all bookings.

Currently individual sellers, like drivers and accommodation hosts, only have to charge GST if they reach the $60,000 annual revenue threshold.

National finance spokesperson Nicola Willis said if all sellers had to charge GST, the costs would likely be passed to consumers.

"We expect that this will increase prices in the middle of a cost of living crisis. It's another example of how small things added on bit by bit ... all add up to higher prices across our economy."

Willis promised National would reverse what she is calling the 'app tax' if her party was elected in October.

Inland Revenue Department had warned the government consumer costs would increase if the proposal was implemented.

"If GST is required to be collected by digital platforms on these services, it is assumed this will be passed on fully to consumers.

"This will increase the cost to consumers of purchases made through digital platforms by up to 15 percent."

Airbnb expressed its opposition to the proposed changes during the select committee process.

In a written submission, Airbnb head of public policy Michael Crosby said the new tax would "stifle Aotearoa's economic recovery at a time where tourism operators across the sector are suffering and borders have only just reopened".

"The result is that guests and hosts will bear the brunt of these costs at a time where the cost of living and inflation are skyrocketing, a sentiment echoed by our hosts.

"If the proposal to impose GST on all platform accommodation bookings is implemented, modelling based on the Oxford Economics Report predicts up to a $.5 billion decrease to New Zealand's GDP which would have otherwise been generated from tourists staying in Airbnb listings," Crosby said.

Hospitality New Zealand's Julie White supported the proposed change, saying there was "consistent frustration" among members at the "lack of a level playing field."

"Commercial accommodation providers are required to undertake a range of compliance in order to run their businesses, including charging GST on services, while home-share and whole-of-house rentals do not face the same costs but in many cases are for all intents and purposes are running a business."

A spokesperson for Revenue Minister David Parker said people who sold services through apps often had an advantage over other suppliers, as they were able to trade without charging GST.

The proposed change would level the playing field, the spokesperson said.

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