Metro

State leaves millions on table in rental revenue

Carl Court/Getty Images/File

New commuter rail lines. Additional treatment beds for opioid addiction. Affordable pre-kindergarten.

The list of projects Massachusetts leaders would spend money on if they had it is endless, and yet available resources are finite, as officials have noted during recent rounds of budget tightening efforts. But what if there were $18.3 million in untapped revenues waiting to be accessed?

It’s not a fortune, but Airbnb, the online platform that allows property owners to rent their homes, says it’s money that the company is waiting to help the state and cities and towns collect.

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“It’s a way to demonstrate to the Commonwealth and the leaders of the Commonwealth that we’re good corporate citizens,” said Will Burns, Airbnb’s public policy director for Massachusetts.

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On Nov. 1, Massachusetts became the only New England state that does not permit Airbnb to collect and remit room occupancy taxes on behalf of its users. Rhode Island was the first state in the region to make the leap in August 2015, followed by Vermont and Connecticut in 2016, and Maine and finally New Hampshire this year.

In tax figures shared with the News Service, Airbnb estimates that it could have collected $18.3 million in state and local room taxes between Oct. 1, 2016 and Sept. 30, 2017, based on guest arrivals during that period. The estimate assumes a 5.7 percent state room occupancy tax rate and local rates ranging from zero to 6 percent.

The total also amounts to about $3 million more than the prior year when Airbnb estimated that $15 million in taxes were being left on the table.

More than 290,000 renters in Boston would have paid $9.6 million in state and local taxes over the typical stay, while more than 95,000 Airbnb guests in Cambridge would have paid $3.3 million. If state and local taxes had been collected elsewhere in Massachusetts, 860,000 short-term renters would have chipped in another $6.9 million.

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Burns said in states that have started making short-term renters pay room taxes, the company has not seen a drop in usage or a gravitation of travelers back to more traditional hotels and inns. “I think the way that it’s done is it’s just included in the price of renting the listing, and there’s still a value proposition even when we apply the tax for those who want to live like a local,” he said.

It’s not that politicians don’t want the money. They just haven’t agreed yet how to tap into that market.

Governor Charlie Baker and House and Senate leaders have all proposed different strategies for taxing short-term rentals. Baker put a plan into his budget this year that would have taxed short-term rentals at the same 5.7 percent rate the state charges in hotels for people who rent their houses or apartments more than 150 days a year.

The Senate also put a provision into its budget to tax short-term rentals no matter how many days the units are rented, but that effort did not survive negotiations with the House.

“The ways of the Massachusetts Legislature are a mystery to all of us,” Burns jokes.

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Representative Aaron Michlewitz, House chairman of the Financial Services Committee, has been working this session to refine the proposal he crafted last session and develop a bill that would not only tax short-term rentals, but would also regulate the market and impose consumer protections to make sure cities and towns can track the units being rented and ensure their safety.

Airbnb estimates that it could have collected $18.3 million in state and local room taxes between Oct. 1, 2016, and Sept. 30, 2017, based on guest arrivals during that period.

There are also concerns in some neighborhoods that short-term rentals are eating into the local housing stock, and some owners, instead of sharing their homes a few weeks a year, are buying property for the sole purpose of renting it and operating de facto hotels.

Michlewitz, of Boston’s North End, held listening sessions this summer in different regions of the state to understand the unique markets from the Berkshires to Cape Cod. He told the News Service last week, after the Legislature wrapped up formal sessions for the year, that the bill is still being developed.

If it does surface next year for a vote, Burns said he hopes the state has a “light touch” on the regulatory side of the debate and keeps the tax structure simple.

“The best tax systems are pretty simple and easy to understand,” he said.

Airbnb also does not oppose regulations — for instance, a requirement that all units have smoke detectors — as long as the requirements are “reasonable.”

“Some of our concerns are around giving rental vacation destinations flexibility to regulate differently than the city of Boston or Somerville,” Burns said.