Airbnb says state, cities lost out on $15m in missed tax revenue
Airbnb Inc., the online home-rental company that is facing increasing pressure to regulate its business in Massachusetts, said state and local governments could have received at least $15 million over the past year from hotel taxes on its users.
That’s a pittance compared to more than $430 million in hotel taxes paid to state and local governments during the last fiscal year, indicating that Airbnb’s business is still dwarfed by traditional hotels and other short-term-lodging businesses in Massachusetts.
But it represents a new, growing stream of revenue that could prove tantalizing to local officials as they debate whether and how to regulate the emerging online business of renting residential homes and apartments to the general public.
The company released the tax estimates ahead of a Dec. 12 Boston City Council hearing to examine the need for Airbnb regulations in the city. The Cambridge City Council also is considering new regulations, and state lawmakers have said they plan to tackle the issue again next year.
Officials say they are spurred by worries that landlords are converting too many residences into de facto hotels for tourists, business travelers, and other visitors. The traditional hotel industry also is lobbying for regulations on private short-term rentals, arguing that online platforms such as Airbnb have allowed competitors to flourish without paying room taxes or following that industry’s rules on safety, health, and cleanliness.
Airbnb has said it would welcome extending the state’s hotel taxes to its rentals. Earlier this year, legislators failed to pass a bill that would have applied those taxes to services such as Airbnb and used the money to pay for an extension of the state’s earned income tax credit. House Speaker Robert DeLeo, however, has said taxing and regulating Airbnb and similar services will be one of the key issues before lawmakers next year.
In figures provided to the Globe, Airbnb said its renters would have contributed $4.5 million in Boston and $2.5 million in Cambridge if state and local hotel taxes, which amount to 14.45 percent in each of the two cities, had been collected in the 12 months through October.
Rentals elsewhere in Massachusetts would have generated at least another $8 million over that time, Airbnb said, assuming a tax rate of 11.7 percent.
Key local lawmakers, however, said they were more concerned with ensuring that online home-rental companies aren’t disrupting neighborhoods or siphoning long-term housing from the market.
“For me, it’s never been about tax revenue,” said Sal LaMattina, a Boston city councilor who requested the hearing about Airbnb rentals in the city. “It has always been about them taking away housing units for working families in the neighborhoods. That’s been my concern from the very beginning.”
Craig Kelley, a Cambridge city councilor who has supported regulations that would require hosts to live in the building where they’re renting a unit, said his city is “committed to using the tools available to us to ensure the integrity of our neighborhoods and well-being of our residents.”
Although it supports taxation of its rooms, Airbnb also has argued that regulations should be less stringent than those governing hotels and apply mostly to larger commercial operators, rather than homeowners.
“We are also committed to working with public officials to create comprehensive home-sharing legislation that promotes responsible home sharing — and allows our host community to pay its fair share of taxes,” the company wrote in a statement.