Finance Committee on Oct. 20th, 2017

[Alexandra Dagg]

We also purchased a company in Montreal recently. It's Luxury Retreats with 250 employees employed in Montreal.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Okay.

I just want to make sure we're talking about the same thing. When someone in Toronto or Montreal rents their apartment to a visitor or a tourist, Airbnb earns something from that transaction.

Where will that revenue be taxed?

[Alexandra Dagg]

We earn 3% on every transaction, so 97% stays with them. Our parent company is headquartered in Ireland and the Irish company pays whatever taxes we owe wherever in the globe, but we're very pleased to be able to contribute the tourism tax in Quebec—

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Yes. I am aware of the agreement. You recently commented on it in the media. We commend Airbnb for contributing to the City of Montreal's accommodation tax. However, the revenue from the transactions is taxed in Ireland, not in Canada. Is that correct?

[Alexandra Dagg]

The bulk of the revenues are actually taxed in Canada with the 97% that are earned by our host community subject to income tax.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

That's the case as long as those host communities declare it voluntarily, correct?

[Alexandra Dagg]

Yes, but the voluntary tax compliance is the heart and soul of our income tax across the entire country. That's one of the reasons why we collaborated with CRA to improve that. We're very pleased about our partnership to help with the education and knowledge about compliance with income tax.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

I understand that this is your business model, as is the case with other companies such as Amazon or Netflix. However, this poses problems for the Standing Committee on Finance in terms of tax revenue for our social programs and the government's actions.

I am the member for Rosemont—La Petite-Patrie. Many people in my riding rent their apartment to tourists, and we understand that. We agree with the concept of the sharing economy. However, we receive many complaints from our constituents about certain abuses. Apartments are purchased for the sole purpose of renting them on Airbnb, which causes a very large turnover of people who become tenants of those apartments.

My good friend Amir Khadir has introduced a bill proposing that this system include a time limit of up to a maximum of 60 days a year. This would ensure that the homes are for people who are real residents, who could rent their apartments on the side, not as a main use.

How do you see that and what is your position on it?

[Alexandra Dagg]

We've actually worked a lot with the municipal politicians in Rosemont already, and have had a number of communications with them, as well as other boroughs in Montreal. You may know that there are already regulations in the province of Quebec. We've been working with the province to really modernize that to ensure there's greater compliance, because the way the regulations are drafted right now are very onerous, and for a casual home sharing it provides so many difficult rules that they're just not set up to follow.

With more professional hosts using our platform, like boutique hotels, bed and breakfasts, corporate home services, they should follow a heavier legislative requirement. We think Quebec is beginning to have those conversations, and then we'll continue to try to collaborate with the province.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you very much, Ms. Dagg.

Mr. Goetz, I will turn to you now.

According to a study published this year by the University of Waterloo, Canadians consumed 444 millilitres of sugary drinks a day in 2015. Young people consumed 578 millilitres of sugary drinks a day, the equivalent of 16 teaspoons of sugar.

In your view, is that too much?

[Jim Goetz]

Sorry, I missed the first part of it. I think you said the University of Waterloo.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Exactly.

According to the study, the average consumption of a Canadian was 444 millilitres of sugary drinks per day, with young people consuming 578 millilitres. That's the equivalent of 16 teaspoons of sugar a day.

Is it too much?

[Jim Goetz]

Let me first refer to the University of Waterloo report. It was significantly flawed. The dataset that was used—I can share with you correspondence that we wrote to the university without having received a reply—was sliced into several large categories, and it did not include diet and beverages without sugar. That greatly inflated the amount of calories and sugar the report stated people were actually consuming in Canada.

I can point to Statistics Canada data that shows that since 2004 there was a 20% decline in Canadians consuming sugar through beverages. I would be happy to share that with the committee. I can't speak to the University of Waterloo report, because the university has not gotten back to us about the flaw in its dataset, but I will share with you the letter that we sent to the university and sponsors of that report. It's quite well laid out as far as what the university missed. Sugar in Canadian diets from beverages has been declining over the last 20 years. It is not going up; it is declining.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you.

I would like a copy of your correspondence challenging the methodology used in the University of Waterloo study. It's just that I also have other reports from the Institut de la statistique du Québec and the Institut national de santé publique du Québec, whose point of view is different.

If memory serves, earlier, you said that you have already reduced by 29% the amount of sugar added to products sold to Canadian consumers. If so, I applaud your decision and I hope that you will continue along those lines.

Over the next five or 10 years, do you have a plan to continue your efforts to reduce sugar in your products?

[Jim Goetz]

Yes. Two years ago we made a very public announcement, partnering with the Conference Board of Canada, regarding our balance calories initiative. It was a commitment by our industry to reduce calories—which, again, in our beverages are sugar—by 20% over the next 10 years. No other industry has made such a commitment, and no other industry is actually in a place where it can deliver on that. It's easier for us to reformulate and bring new products to the market.

We're expecting our first update from the Conference Board this fall on how we've done so far over the last two years with that commitment. We are also expecting the newest round of CCHS data, which will be coming out of Stats Canada. That has not been done since 2004.

It will also corroborate our comments that sugar in beverages, as far as how much Canadians are consuming, is in fact going down. This is based on not only customer trends but hard sales data. We know, through publicly available data, how much is being sold into the Canadian market. We know that is rapidly evolving and going down. This is publicly available sales data. It's really very difficult to argue with sales data.

[The Chair, Liberal, Wayne Easter]

We're going to have to cut it there. Mr. Goetz, you mentioned a couple of studies. You can send them to the clerk.

Mr. Fergus.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you very much, Mr. Chair.

Once again, my thanks to all our witnesses.

I will continue along the same lines as my three colleagues before me.

My time for questions is limited. However, I would like to acknowledge the work done by the Canadian Vehicle Manufacturers’ Association and the profits it has made. That’s outstanding and very important for my region. That brings in a lot of money across Quebec. Thank you very much.

I hope I have enough time to talk to Mr. Parker.

Mr. Lipkus, I had the pleasure of participating in some of your activities in Ottawa, so I am very familiar with the work of intellectual property officers.

Ms. Dagg, I can hardly wait to ask you a question because I know you represented the National Hockey League players. I guess it's good to play in the corners, but I'll try my luck with Airbnb.

To follow up on Mr. Boulerice's question, does Airbnb send information to the Canada Revenue Agency, or to Revenu Québec—which is the province where I live— to report the income that homeowners received when they rented their apartments or rooms to visitors?

[Alexandra Dagg]

Are you talking about the tourist tax in Quebec?

[Greg Fergus, Liberal, Hull—Aylmer, QC]

No, I'm not actually talking about the tourist tax.

Like all employers, do you send information to Revenue Canada about your profile and your revenue, for example?

[Alexandra Dagg]

They're not our employees. The hosts are not our employees. We cannot send that kind of personal, identifiable income tax information. They don't work for us. That's the heart of the idea of the an Internet platform.

However, with the province of Quebec, in terms of our lodging tax agreement, we've agreed to provide the province anonymized, aggregated quarterly data that supports the transmission of revenue that we are collecting and remitting on our platform to the Government of Quebec.

It also includes fairly detailed breakdown information about income by tranche, so that Revenu Québec officials can work on that and understand how the revenue is being earned and match it with our own records. We expect that we'll continue to partner with Revenu Québec in this area.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

You collect the hotel tax, right?

[Alexandra Dagg]

Yes, we've built it into the engineering on our platform, so that when you book an Airbnb listing in Quebec you will see, when you look at the final amount, if it was $100, it's now $103.50. We collect it on the back end in our platform, so the host community doesn't have to touch it. We cover all of the administrative burden and send a quarterly cheque to Revenu Québec.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

So is the Government of Quebec or the Government of Canada aware that certain transactions have been initiated?

[Alexandra Dagg]

Absolutely. They'll get an anonymized listing that backs it up as well, plus they have an audit if they want to go and check to make sure. This way we ensure 100% compliance with the lodging tax in Quebec on our platform. We're the only platform that does this.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

In light of that, you can understand why the hotel industry feels you have benefits they do not have.