We hope that Massachusetts this year joins other states that are taxing and regulating short-term online rental services such as Airbnb.
Different versions of legislation governing that growing portion of the “sharing economy” were proposed this year in the House and Senate, and Gov. Charlie Baker in January issued his own proposal to extend the state’s 5.7 percent room occupancy tax to property owners who rent out rooms for more than 150 days per year with the help of Airbnb or other online services.
We favor the approach taken by the Senate in its budget proposal to impose a 5 percent state tax on all rooms rented for at least $15 per night, with cities and towns having the option to add up to a 6 percent local tax.
Those are the same rates that hotels and many traditional bed and breakfasts charge their guests. B&Bs with three or fewer rooms are not required to impose those taxes (although perhaps they should, if Airbnb accommodations add a tax to room bills).
The Senate bill also would allow local communities to approve regulations governing registration, licensing and inspections of host homes using the online rental services — potentially making them subject to the same requirements as traditional bed and breakfasts.
At stake is a significant amount of money — the Senate plan would generate $18 million in new revenue for the state during the first six months, according to President Stanley Rosenberg of Amherst — and level the regulatory playing field with competitors including hotels and traditional B&Bs.
Airbnb, the largest of the online rental services, supports the Senate legislation, though its head of global policy and public affairs, Chris Lehane, is more bullish about collecting taxes from guests than regulating the hosts.
“Our preference is to keep it simple and to make it broad-based,” Lehane, a 1990 graduate of Amherst College, told the Gazette’s editorial board last week. “We want to pay our communities’ fair share of taxes.”
Airbnb has 275 tax “partnerships” with state and local governments across the country for which it collects the room taxes from guests. It is more efficient for the online service to make those agreements at the state level, creating a uniform tax rate in Massachusetts. And establishing short-term online rentals as a taxable industry gives legitimacy to a sector of the economy that is still relatively new.
But Lehane cautioned against overregulating homeowners who are renting out a room occasionally to supplement their income. “Regulations have to be consistent with the way people are living their lives,” he said, adding that “Airbnb is how millenials want to travel” and that the service is self-policing, with guests rating their hosts in a public way and calling out deficiencies.
AirBnb has 12,800 hosts in Massachusetts who on average rent their rooms 39 nights a year, which produces a typical annual income for one host of $6,100.
We believe that Airbnb and similar online services should supply local communities with enough data so they can establish a registry of residents hosting short-term rentals and perform inspections as needed to certify that they comply with building and health codes.
Lynda Faye has used Airbnb to advertise rooms at her Purple Gables Bed & Breakfast on East Pleasant Street in Amherst, and she told the Gazette that she welcomes the inspections required of traditional B&Bs.
“It’s another sign to prospective guests that we’ve passed a certain level,” she says. “As a consumer, you don’t know what you’re getting with Airbnb, but with B&Bs it’s part of a legitimate, well-respected organization.”
Northampton Mayor David Narkewicz says that health and safety issues are the most important factor in regulating short-term rentals as government adapts to the changing economy. “Most people who stay in hotels or B&Bs have an expectation that there are municipal and state codes that are being followed and that someone is regulating.”
We urge the Legislature and governor to adopt the Senate proposal that will produce additional tax revenue while taking prudent steps to make sure travelers enjoy a safe environment wherever they choose to rent a room in Massachusetts.