Airbnb tax dropped from Massachusetts budget, negotiations continue
While Massachusetts lawmakers could not agree on a budget measure to tax short-term rentals such as those offered through Airbnb, they pledged on Friday to continue the long-running debate over state oversight for the largely unregulated industry.
The Senate had pushed a measure in its budget proposal to apply the state’s 5.7 percent hotel tax, and local levies up to 6 percent, on private residences rented for short stays.
The change was projected to raise $18 million in the first six months of next year, but it did not survive negotiations with the House, where members want more time to discuss whether to subject short-term rentals to same regulations and safety rules that hotels must abide by.
Representative Aaron Michlewitz, the Boston Democrat who is leading the House effort on short-term housing, said he is confident that the Legislature will come up with a plan for short-term housing, but he declined to predict how long it might take.
“There is certainly an appetite to get this done, or get this issue resolved, by all parties involved here in the State House,” he said in an interview.
Governor Charlie Baker has proposed imposing hotel taxes only on property owners who rent five months or more each year.
Nearly everybody involved in the debate — including industry leader Airbnb — have agreed that there should be some taxation on short stays. Such a move would close a loophole that privileged private rentals over hotels.
However, a similar push to tax the rentals failed last year in the waning days of the legislative session.
In a statement, Senate President Stan Rosenberg lamented the failure to include the provision in this year’s budget, which he said would have made the spare spending plan “somewhat better.”
Senate Majority Whip Michael J. Rodrigues said in an interview that he expects discussions on the topic to now continue into the fall, but he said his chamber remains eager to leave regulatory questions largely to local governments.
“We want to tread lightly when it comes to the 21st century innovative economy and these new ways of doing businsess,” he said. “Our position is that we just level the playing field as far as the tax revenue goes.”
Paul Sacco, president and chief executive of the Massachusetts Lodging Association, said the fact that the issue was not resolved gives him hope that the Legislature will decide to impose some regulations at the state level, a priority for the hotels who are his members.
“My feeling is that there will be some form of taxation and regulation once they deliberate,” Sacco said.