A controversial bill aimed at simplifying tax collections for transient vacation rental hosts was amended Monday to make it tougher for illegal operators to skirt local ordinances.
As introduced, House Bill 1850 would let the online vacation rental giant Airbnb and similar companies arrange to collect general excise and transient accommodation taxes on behalf of hosts and pay the money to the state. After language was added to deter illegal operations, the bill passed the Senate Committee on Tourism and International Affairs with support from Sens. J. Kalani English, Brickwood Galuteria, Josh Green, Kaiali‘i Kahele and Jill Tokuda. It was also supported by Sens. Rosalyn Baker, Michelle Kidani, Will Espero, Les Ihara Jr., Clarence Nishihara and Sam Slom from the Committee on Commerce, Consumer Protection and Health.
Baker, chairwoman of the Commerce, Consumer Protection and Health Committee, said the amendments will be posted by Thursday. She said language will be added that requires Airbnb to notify hosts who want to use its platform that they must comply with all local ordinances.
“It’s an attempt to make sure in no way that people who are using the platform are able to evade local laws,” she said. “It’s meant to be a bit of a deterrent. If you know that you have to make the statement, you better be able to back it up or you could get dumped off the site.”
Cyn Wang, Airbnb public policy manager, said Airbnb is deeply committed to working with lawmakers to help hosts pay their fair share of taxes, an estimated $15 million annually in Hawaii.
“We’ve listened carefully to feedback from the community throughout the legislative process, and we’re open to the proposed amendment because it seems to respond directly to an area of concern,” she said.
Airbnb, many of its Hawaii hosts and the state Department of Taxation have long supported the intent of House Bill 1850, which they say would make it easier for Hawaii to collect taxes from transient vacation rentals. Tax collection can be difficult since Airbnb allows travelers to book accommodations from its client list — much of it mom-and-pop operations — the way sites like Expedia, Travelocity and Orbitz help travelers rent hotel rooms and cars and find flights.
However, early opponents including Sen. Laura Thielen argued that the bill would make it harder to identify hosts that are violating zoning and enforce laws. High-profile groups such as Unite Here Local 5, the Institute for Human Services, Save Oahu’s Neighborhoods, Keep It Kailua, Faith Action for Community Equity, the Hawaii Appleseed Center for Law and Economic Justice, the AiKea Movement and Save North Shore Neighborhoods previously asked the state Department of Taxation to withdraw its support of the bill and petitioned Gov. David Ige to veto the bill if it should move forward.
Baker said the amendments were aimed at addressing some of the concerns raised by bill opponents. One point of contention with the bills pertains to language that exempts tax collection agents from providing the state with the names and addresses of the hosts that they service. As written, the bills would allow companies like Airbnb to collect taxes directly from their sites under the agent’s general excise tax and transient accommodations tax licenses. Owners who are renting units through a valid tax collection site would no longer need separate GET and TAT licenses.
Another concern is that passage of either bill would undo the effectiveness of Act 204, which took effect Jan. 1 and requires owners and managers of Hawaii vacation rentals to post their transient accommodations tax identification numbers on their online advertisements or face fines. If the new bills pass as written, the Department of Taxation has said that posting of the agent’s tax ID would be sufficient to meet the website advertisement requirements.
“One of our members said the amendments were the only way that he would support this bill,” Baker said. “They may not have suited everyone, but it was a good-faith effort on our part to let the community know that we’ve heard their concerns and are attempting to mitigate them.”
Kathleen Pahinui of Save North Shore Neighborhoods said the amendments are an improvement.
“It really now puts companies like Airbnb in the position of having to make sure that people are in compliance,” said Pahinui, who has been a fierce critic of illegal vacation rentals, which she says have increased home prices and rents and contributed to homelessness in her community. “There are still loopholes that they need to close, but it’s easier to fix something that’s moving in the right direction.”
Baker said passage of the bill would benefit the state because it would ensure that all taxes, at least by Airbnb hosts, are collected and paid.
“We know that there are individuals that are advertising on other sites and not paying their taxes,” Baker said. “Because Hawaii is a significant destination, we could be losing a significant amount, so it’s important that we have the ability to collect the taxes.”
Baker said an amended House Bill 1850 now advances to the Senate Ways and Means Committee. A companion bill, Senate Bill 2693, has not been scheduled. However, it has been referred to the House Finance Committee.
