Two bills to allow online vacation rental sites like Airbnb to collect taxes from hosts and remit them to the state moved forward Tuesday, including one that emerged after a task force bill to study vacation rentals was gutted and replaced.
Members of the House Finance Committee on Tuesday passed an amended version of Senate Bill 704 which is similar to a version of House Bill 1471 that died before crossover. The controversial bill skidded through with only four ayes, 10 reservations and three no votes. Ten members of the Senate Ways and Means Committee also voted yes on an amended version of House Bill 1471 earlier Tuesday.
“If home-sharing platforms were allowed to collect and remit taxes, we estimate Airbnb hosts would have generated $40 million for the state over the last two years alone,” Airbnb Policy Manager Matt Middlebrook said.
A recent version of one of the pending tax bills contained provisions that conflicted with more than one federal law, but the Senate amended it to address the flaws, Middlebrook said.
While Airbnb is only Hawaii’s third-largest online vacation rental hosting site, the company has aggressively pursued legislation that would allow it to collect taxes on behalf of vacation rental owners and remit them to the state. Last year Airbnb’s efforts contributed to a tax collection bill making it all the way to Gov. David Ige’s office. Proponents said the bill would yield more taxes since some short-term rental owners were ignoring zoning laws. The state Department of Taxation supported the intent of the bill, but Ige vetoed it, saying it provided a shield for owners who weren’t complying with county laws.
In mid-March the company launched an aggressive marketing campaign that featured a series of advertisements about four local owners. In each of the ads, the owners talk about home-sharing and how it benefits them and the state. Still, Airbnb’s opponents object to the proliferation of online vacation rentals, which has expanded well beyond limits set by county zoning laws. They say the growth of online vacation rentals has contributed to Hawaii’s housing crisis and changed residential communities.
Middlebrook said Airbnb supports Senate Bill 704 in its current form, which he maintains does not affect a user’s county land use liability or shield owners since taxpayer information is “already confidential under state law.”
“The question before you is, Do you want to pursue additional revenue now or delay until local regulations are perfected?” Middlebrook testified.
The Oahu Alternative Lodging Association, which has about 1,000 members on its mailing list, testified in favor of SB 704. The organization’s vice president, Brynn Rovito, argued that bookkeeping requirements and understanding of tax requirements are “particularly challenging” for operators that are hosting on a short-term basis to “make ends meet.”
Still, the American Hotel & Lodging Association, which has 110,000 members in Hawaii, objects to the language in SB 704, said AHLA spokesman Kekoa McClellan. The city Department of Planning and Permitting’s acting director, Kathy Sokugawa, opposed SB 704 as written because she said it allowed owners to self-certify that they are legal.
Max Sword, who testified on behalf of Outrigger Enterprises Group, told lawmakers that legislation is not needed for Airbnb to collect taxes.
“You could voluntarily do it now,” Sword said, adding that Outrigger offered a similar service for condominium owners at the Ala Moana Hotel.
However, AHLA, the city and Save Oahu’s Neighborhoods may be open to HB 1471.
“We stand united behind responsible and appropriate regulation of short-term rentals in Hawaii,” McClellan said. “We the hotels are working closely with Unite Here Local 5 and Save Oahu’s Neighborhoods on these regulations.”
Those organizations favor HB 1471, which requires short-term rental owners to register with the state and short-term rental platforms to provide transparent data, he said.
Another positive is that the bill maintains the authority of each county to regulate short-term rental activities, he said.
