Viewpoint: Ottawa must embrace the sharing economy

Concerned about your purchasing power with a weak dollar and an uncertain job market? There’s an app for that. 

Now you can crowdsource anything from hotel rooms to handicrafts directly from your smartphone. 

Canada’s sharing economy is right at your fingertips.

Companies such as Airbnb, Etsy and Uber have tapped into this hybrid market model, offering peer-to-peer access to goods and services.

Consumers love the reduced rates companies offer and the convenience of online and mobile platforms.

But businesses in the traditional economy are starting to feel like horse-drawn carriages in the age of the automobile. 

Licensed taxi companies have urged the city to crack down on “bandit” taxis, claiming drivers lose thousands of customers to Uber, which they’ve labelled an illegal ride-sharing program.

So far the federal government has employed a hands-off approach towards the sharing economy. 

If the government wants to profit from this emerging sector it must be proactive.

The risk of unreported income from workers in the sharing economy leads to tax compliance issues. 

Ultimately, this decreases funding for social services like health care and education. 

This is a major problem because spending cuts are currently straining the health system, which must accommodate about 150,000 new patients every year

The industry is growing at a rapid rate and is expected to reach global revenues of $335 billion by 2025, according to the Ontario Chamber of Commerce. 

That’s a massive source of potential tax revenue and employment opportunities for Canadians. 

This is good news, as a recent Ipsos poll for Global News suggests unemployment has replaced health care as the highest priority for Canadians. 

By embracing the sharing economy Ottawa can address both of these concerns. 

First, the government must establish greater taxation frameworks to ensure these activities can be used to fund social services. 

Ontario has already taken a small step in the right direction. 

The province recently launched a pilot project with Airbnb to encourage its 11,000 hosts in Ontario to properly claim their income taxes. 

Airbnb has agreed to notify hosts via email to report the income they earn by renting out their spaces through the company’s website. 

Currently, the Airbnb partnership is a voluntary program, meaning hosts choose whether or not to heed the government’s request. 

It is unlikely Airbnb users will be enticed by this approach since they realistically have very little to gain by claiming their extra income.

This means the government must create incentives for users such as new methods of providing employee protections to freelance and independent contractors.

It also requires the government to enforce a mandatory taxation system on workers within the sharing economy.

The number of Airbnb listings in Ottawa has grown rapidly with more than 200 rentals located in Centretown alone. 

The total number of listings in Canada exceeds 33,000 and hosts accommodated more than 627,000 guests in 2015. 

When Airbnb users avoid claiming this income, the government loses a significant amount of tax revenue. 

The Canada Revenue Agency and the government must create new regulatory frameworks to ensure services that should be taxed are in fact complying. 

This includes compulsory taxes for rideshares, room rentals and the extra income earned by other peer-to-peer services. 

The sharing economy has been generous to both consumers and entrepreneurs.

If the government capitalizes on this opportunity, Canadians will enjoy the lion’s share of benefits.