Vacation-rental tax: Conflicts exists outside Hawaii
Honolulu is not alone with its struggle to accommodate unconventional accommodations in its tourism sector.
Cities such as New Orleans and Chicago have moved ahead to collect taxes from these businesses and managed to subsequently create a regulatory system for them, said Cynthia Wang, public policy manager for AirBnB.
The unresolved conflicts over legalizing vacation rentals at the county level, however, was one reason Gov. David Ige cited in his veto of House Bill 1850, which would have allowed AirBnB and other online rental sites to collect taxes on behalf of the state.
Honolulu has not legalized any new vacation rentals since 1989 and has not settled on any way to do so. Even a new law to require businesses to file their business tax number with any online listing, Act 204, has not been fully implemented because of a lawsuit AirBnB filed over a similar program in San Francisco.
Like the Hawaii law, the San Francisco ordinance required brokers to get the government’s identifying number of the business as part of the information it collects from the operator of the rental. In this case, it’s the number the city issues when the short-term rental operation registers legally with the city.
In November, U.S. District Court Judge James Donato denied the company’s requested injunction against the San Francisco ordinance. Among other findings, he rejected the claim that the measure violated a federal communications statute by making the broker responsible for the content of the posting.
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The judge found that, because the final version of the ordinance required the registration number to be collected only at the point of the rental booking rather than in the ad listing, there was no violation of the communications statute.
David Louie, former Hawaii attorney general, supported HB 1850 on behalf of an internet business group last session. Despite the San Francisco ruling, he said Hawaii’s requirement is linked to the advertisement itself and maintained it still violates the federal statute.
The San Francisco parties are now in court-ordered mediation to resolve remaining issues. Kevin Guy, director of San Francisco’s Office of Short Term Rentals, could not comment on the dispute. But he did say having online brokers check for registration numbers is more practical than the city chasing them down individually.
“Getting all those horses back in the barn, it can be done,” he said, “but it would take a lot more time.”
4 responses to “Vacation-rental tax: Conflicts exists outside Hawaii”
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Absolutely, Airbnb and other vacation rental marketers should be held liable for ensuring their advertised vacation rentals are legal. The FCC requires truth in advertising. U.S. District Court Judge James Donato decision clears the way for Hawaii to require vacation rentals to prove they are legal and meet all County and State laws before being advertised on the web.
Huivaa knows that the lack of on-base housing for the bloated military presence on Oahu and their huge tax-free housing allowances are the real reasons for the shortage of affordable rental housing.
We have 50,000 active duty servicemen, many with families. They take up 10-20 thousand rental units in our neighborhoods. They also get $2000 $4,000 tax-free housing allowance. Local families can’t compete with these military families.
To make matters worse, removing tens of thousands of units from the local rental market and the impact of these huge subsidies has jacked up the price of rent for tens of thousands more local familiies. Everyone ends up paying more.
The impact of AirBnB is only 2-5 thousand units, many that would not be rented long term anyway. It’s clear what the bigger impact is: the military.
Huivaa apparently could care less about this, and has justified ignoring the military impact and exaggerating the AirBnB impact by saying the most important thing is for the state to enforce the laws on the books. This ignores the fact that the County is responsible for enforcement, not the state, and that taxing an activity is a disincentive that discourages it.
It is disheartening that Huivaa keeps soewing the same half-truths and flawed logic about this issue.
If we really want to use regulation and enforcement to increase access to affordable housing on Oahu, let’s pass laws that levy heavy taxes, fees and restrictions on off-base housing and the use of housing allowances, and enact other policies that promote on-base housing.
Nice red herring Dano, but no one is biting…
Last November there were over 600,000 visitors to Hawaii.
I assume its about the same for most months.
The zoning that restricts tourist accommodations is an attempt to allow this massive influx without overly disrupting the lives of people who live and work here.
When a lot of people start skirting around this, it degrades its purpose.
This seems to have not been too much of a problem until internet companies made it so easy.
New restrictions are needed for the new situation.