SAMANTHA ENSLIN-PAYNE: It's getting harder to take the taxman for a ride
The gig economy is providing much-needed income for cash-strapped South Africans - whether you are an Uber driver, an Airbnb host or have a side hustle to cover your expenses. But for those operating through the platforms of multinationals, the days of earning under the taxman's radar are fast coming to an end. Last month, the government announced plans to regulate Airbnb, and it has generated much outrage. The proposed regulations may limit the number of nights per year that accommodation can be rented.
It's not unprecedented. In London, homes on Airbnb can only be listed for 90 days a year, while in Barcelona, Airbnb had to remove hundreds of listings that did not have licences. Other cities, such as San Francisco and Berlin, have also tackled the issue with regulations, not always with success. In Paris, which is one of the largest Airbnb markets, city officials have been concerned about the purchasing of second apartments with the express aim of using them for short-term rentals, because of the impact on the long-term rental market and the fact that entire neighbourhoods were being turned over to tourists, forcing Parisians out of the city.
And if you are wondering how cities enforce these rules, Airbnb does it for them, at least in some locations.
In SA, Airbnb has tens of thousands of accommodation options to rent, from homes to apartments to rooms - often sharply undercutting hotels and traditional bed-and-breakfast establishments.
Airbnb said "the overwhelming amount of money generated by the Airbnb platform stays with hosts and their communities. Last year hosts and guests in SA boosted the local economy by an estimated R8.7bn and the economic impact of local hosts supported the equivalent of 22,000 jobs." The company added that "we follow the rules and continue to pay all of the tax that is due in all of the places that we do business".
But whether its hosts do is really the question.
Airbnb says "hosts on Airbnb want to pay their fair share of tax. We frequently remind hosts to check and follow tax rules and have downloadable transaction histories for hosts." Taxman take note.
Hotels, guesthouses and caravan parks, which generated income of R45.9bn in 2016, according to Stats SA, have a broad impact on the economy, by investing in bricks and mortar and the jobs that come with that. They pay tax (including collecting a tourism levy from guests used to market SA as a tourist destination) and pay city councils commercial rates (rather than lower residential rates) on their properties. There are zoning and labour laws, and health and safety regulations to comply with.
There might be an element of schadenfreude that Airbnb hosts have been able to thumb their noses at the establishment, leaving hotels suffering due to fierce competition from rentals in private homes. But consider that if a hotel group was not paying tax, we would have a lot to say, so why, then, should those who rent their properties to travellers be able to shirk their responsibilities?
As Tshifhiwa Tshivhengwa, the CEO of the Tourism Business Council of SA, points out, the flipside of not regulating short-term rentals in private homes is that it could become a free-for-all - no rules for any business in the tourism industry. While he is not proposing that, he raises it to highlight what "true disruption" could look like. But if consumers are to be protected, there need to be rules, which he concedes do not necessarily have to be the same as for hotels but could, for example, require a homeowner to register for a business licence if they rent their home for more than 30 days a year.
There is scope to allow for healthy competition in the market, but if everyone wants to benefit they need to play by a set of agreed rules and pay their dues.
• Enslin-Payne is acting editor of Business Times..