The state must truly be rolling in dough. How else to explain why lawmakers are leaving $25 million in potential revenue from a statewide tax on short-term rentals on the table?
Time’s a wasting. Beacon Hill should agree to the fixes Governor Charlie Baker sent back that would allow the state — and localities — to begin to collect a tax on rentals made through services like Airbnb. The alternative is to start over again in the next legislative session, which means another year of lost revenue.
Airbnb recently released data on summer rentals (Memorial Day through Labor Day) on just the Cape and Islands, and only for their own site, showing that had the tax been in effect, it would have meant about $2.3 million in additional state revenue. If the communities involved had opted to impose a 6 percent local tax, they could have realized a similar amount.
The notion of taxing and regulating short-term rentals has been germinating for well over a year on Beacon Hill. Airbnb itself was perfectly fine with the idea — and how often does an industry come in and say, sure, tax us, please? And the hotel industry was demanding it, insisting they were tired of being undercut by untaxed web-based rentals.
So what could possibly go wrong?
Well, first, House and Senate lawmakers at odds over the structure of the bill didn’t reach agreement until July 29 — two days before the end of formal sessions — and sent it to the governor July 30. Even then Baker gave the relevant legislators a heads-up that he intended to send the bill back with amendments. A quick okay in both branches and everyone could go home happy.
But no, apparently lawmakers were intent on making the perfect — as they defined it — become the enemy of the good.
The governor’s amendments would provide an exemption for those renting out their homes or rooms in them for fewer than 14 days a year. The administration estimated that would only lower revenue estimates by some $300,000 a year. Baker also proposed adding a layer of privacy to the registry that would be set up to keep track of short-term rentals, requiring the public registry to list only street names and towns but not “personally identifiable information.”
Other amendments were critical to making sure the new law didn’t violate bond covenants for the Boston Convention and Exhibition Center, which are backed in part by a revenue stream from some hotel taxes.
The governor’s amendments were no poison pill — not then and not now.
But approving them now would require unanimous consent in both branches. Heaven knows, when it comes to approving such local goodies as new liquor licenses, that’s not a problem during these months when the Legislature meets in “informal” session.
State Representative Aaron Michlewitz, who spearheaded the bill on Beacon Hill said, “Would I personally want to see the bill die because of the [14-day] tax exemption? No. But the registration is a key piece.” He wants to see at least street numbers on that registry and insists he is still “in talks” with the governor’s office. But surely those minor matters can be tweaked in a follow-up bill or when the Department of Revenue implements the legislation.
Meanwhile real money is at stake here — and legislative leaders ought to at least try to get this done rather than starting over in January.