Hoda Mohtar, who owns Les Diplomates Executive Suites, a bed and breakfast in Waterloo, Ontario, said in addition to paying 13% in taxes, she pays to have her four-room inn accredited and inspected regularly. She also pays CAD$4,000 ($3,590) per year in agency fees — membership fees, listings, inspections, conferences — and about CAD$1,400 ($1,250) in insurance.
“We do everything by the book and others are just opening shop,” said Mohtar. “I don’t want to stop anyone from making money in the shared economy. But for them to not pay taxes, not to be legislated, not to be inspected -- that’s dangerous.”
Several Saskatoon Airbnb hosts were contacted for this story, but declined to be interviewed or did not return queries before publication. For many who list their spare rooms or homes on sites like Airbnb, the money they make has supplemented their incomes or provided extra spending money, as a BBC Capital story found earlier this year.
Debbie Judt, owner of Glacier Park B&B in Saskatoon, shares her colleagues’ concern that some Airbnb owners might not be paying taxes, though she stresses that she doesn’t know what her neighbours are doing and doesn’t have a problem with the site — in fact, about 5% of her business comes through her listing on Airbnb.
“I wanted to be exposed to one of the biggest listing sites in the world because it’s huge,” she said.
Municipalities start to adapt
Eric Brousseau, a professor of economics and management at the University Paris-Dauphine, said the sharing economy is still in its infancy, but believes regulation will eventually catch up. He notes that when French farmers first began opening bed and breakfasts, they could do as they pleased. But now these inns are subject to regulations and standards like any hotel.
“I think by the end you will have control of entry of the market just because it’s needed,” Brousseau said. That could mean everything from inspections to permit requirements to more rigorous tax-collection and professional standards.
That is starting to happen, as regulators are cracking down on both ride- and home-sharing. In the US, New York State Attorney General Eric Schneiderman issued a report stating that 72% of Airbnb rentals in New York City are illegal, violating zoning or other laws (short-term hotel stays must abide by more stringent regulations than those offering long-term rentals).
In San Francisco and Portland, Oregon, Airbnb now collects occupancy taxes for its hosts after housing advocates and neighbourhood groups pressed for stricter legislation. In Spain, Uber drivers caught taking passengers without professional licenses face fines of up to 18,000 euros ($22,500). And, after a German court banned UberPop in Berlin and Hamburg, the ride share company dropped its fare to 0.35 euros (44 cents). A subsequent ruling permitted UberPop drivers to continue because officials believed those fares could only cover the driver’s cost of operating the car and not yield a profit. In other words, they truly have to be sharing.
But Standing believes there is a larger problem: we are now seeing a fundamental shift in the way employment is handled around the globe. He notes that in the past, professionals of all stripes — be they cab drivers or attorneys — regulated their own industries by setting standards, pay rates, training systems, and the like.
“Those old models of the guilds that lived for hundreds of years have gradually been turned over to being run by commercial interests,” said Standing, who notes that outsourcing firms have been auctioning employment, from telemarketing to accounting, to the lowest bidder on the global marketplace for years.
The problem isn’t new to creative professionals — writers, photographers, disc jockeys — who have seen technology-enabled amateurs drive down prices during the past decade.
During the early 2000s, British sports photographer Gareth Jones made a nice living taking pictures at rugby matches and other sporting events in Reading, Berkshire, garnering enough work to contract out to four other photographers.
Things began to change around 2007, when photo-sharing sites coupled with lower cost of cameras and higher quality equipment flooded the market with the work of hobbyists willing to sell their photos for very little — or nothing at all — or post them on public websites for anyone to use.
“Say it was a rugby match. They would take a hundred photographs and two are okay. People are happy with that. It’s not perfect, but it’s good enough,” he said.
After Jones saw his business drop significantly, he realised he had to make some changes. He now shoots events that require a higher degree of skill, like gymnastics competitions and bicycle races.
Jones can offer shots that less-skilled competitors cannot due to their lack of technical skill and training.
“That’s hopefully what separates the professional from the well-meaning amateur,” he said.
At any rate, Jones bears no grudge. “You can’t stop things like that,” he said. “Sometimes it’s better to embrace it.”
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