New Airbnb tax raises concern for Victorian tourism sector

The Victorian government has introduced the short-stay levy to ease pressures on the state’s housing crisis, yet the tourism sector may be negatively impacted.

The legislation, effective 1 January 2025, applies a 7.5 per cent levy on short-stay accommodation that owners are required to pay to the state government.

Though the levy is paid to the state government by short-stay accommodation owners, the tax is redirected and paid by consumers.

The new tax would be included in short-stay packages less than 28 days long and would include bookings made through platforms such as Airbnb and Stayz.

The legislation outlined that hotels, motels and caravan parks were to be exempt from the levy.

The government said this would raise $60 million a year to build affordable and maintainable social housing for the state, according to a radio report from the ABC.

Despite the positive impact the tax would have on the housing crisis, the Victorian tourism sector expressed concern amid the cost-of-living crisis and the potential deterrence it would have on travellers.

According to multiple reports, the tourism sector was not widely aware of the new tax and would have appreciated broader consultation.

Victorian Tourism Industry Council chief Felicia Mariani said the industry was surprised to see that tax would be applied to the total cost of the accommodation, cleaning fees and any other associated service charges.

“The industry has really struggled to come to grips with the complexities of the guidelines for collecting the tax,” Mariani told the Herald Sun.

“This is clearly not simply a little tax that will make no difference - it will add considerably to the cost of short-stay accommodation in Victoria.”

Mariani said the bill was only passed six weeks before being made effective on New Year's Day, leaving the tourism sector with limited time to fully grasp and understand the tax.

“The biggest impact of the short-stay levy is going to be on the consumer. Operators who are required to collect this tax are going to have to raise their prices to cover the additional cost,” she said to the ABC.

As previously reported by Accountants Daily, Victorian shadow treasurer Brad Rowswell said the government was penalising holidaymakers during a cost-of-living crisis.

“Labor’s holiday and tourism tax is an unfair tax from a government that cannot manage money and is desperate to fill its budget black hole,” Rowswell said.

“Premier Jacinta Allan simply does not understand the cost pressures that Victorians are under at the moment.”