Don’t just tax Airbnb rentals — regulate them, too
To tax or not to tax Airbnb-style rentals, there should be no question about it.
Of course travelers booking a stay at a house or an apartment through an online portal should be taxed — just as they are at hotels — and there appears to be enough momentum on Beacon Hill to get something done this session after coming close last year.
No excuses this time. More than 250 jurisdictions around the country levy a tax on short-term private rentals offered by Airbnb, including in Connecticut, Vermont, Rhode Island, and Maine.
But just as important as leveling the playing field for hotel and motel owners — and raising revenue for the state — is developing regulations to ensure guest safety. It’s this piece of the equation that State Representative Aaron Michlewitz, who is sponsoring the House’s legislation on short-term rentals, is pushing for.
Or, as he likes to put it: “The taxation without the regulation piece is where the debate stands now.”
It’s a debate we need to have. Think about this:
A bed-and-breakfast in the town of Brookline is subject to 20 pages of municipal regulations, from fire codes to licensing, while a condo owner listing a room on Airbnb is not.
What’s striking to me is that last year’s debate on how to regulate another new-economy industry, ride-hailing, focused almost exclusively on background checks for Uber and Lyft drivers, to make sure they are subject to similar standards as cabbies.
This year it’s almost all about how much money to collect from Airbnb and its competitors, such as Expedia’s HomeAway and TripAdvisor’s FlipKey.
Airbnb, the largest of such rental sites, reports that it logged about 592,000 guests in Massachusetts last year. Had those stays been subject to the state’s hotel tax rate of 5.7 percent, that would have added an estimated $15 million to the Commonwealth’s coffers.
The company is happily sharing these calculations because it wants to be taxed, and this week it’s airing a new TV commercial about the issue. Now don’t think for a second that this is some kind of benevolent new-economy thing. Guests, not Airbnb, pay the tax! Taxation is also a form of legitimization for these online portals.
Sure, the House, the governor, and the Senate have different approaches to which properties get taxed, and at what rate. They should be able to work out their differences, given the pressure to find new tax revenue and with the state facing perennial budget deficits.
Beyond taxes, lawmakers should be having a robust discussion on issues such as homeowner registration, how much liability insurance hosts should carry, and creating a basic set of safety standards, such as for smoke detectors and fire escapes. They should craft a measure that leaves plenty of control for municipalities so they can further refine the rules.
Ultimately, local communities face the biggest impact from short-term rentals that create commercial activity in residential neighborhoods. The town of Lynnfield found out the hard way, when a murder took place last year in a mansion rented through an online portal.
Officials in municipalities including Boston and Cambridge are also grappling with how to treat short-term private rentals before problems arise. Some of them are holding off until the state acts.
Hearings on the House’s short-term-rental legislation began Monday in Lenox, where over a 100 people testified. Two more will be held, on the Cape and in Boston, this month.
This year the state must act. Collecting taxes should be the easy part, but don’t put off regulation.