A bill to authorize Airbnb to collect state taxes from both legal and illegal vacation rentals when accepting bookings in Hawaii won tentative approval from the House Finance Committee on Tuesday after Gov. David Ige’s staff intervened to ask lawmakers to keep the measure alive.
Skeptical committee members complained that illegal vacation rentals are limiting the supply of available housing for local residents and causing neighborhood problems such as increased traffic and noise.
Airbnb representatives reminded lawmakers that the company is volunteering to collect taxes on behalf of the state, much of which is money the state is not receiving now. However, lawmakers seemed unconvinced.
Cynthia Wang, regional public policy director for Airbnb, said the online rental company had more than 8,300 listings in Hawaii last year, but Airbnb representatives said they do not know how many of those vacation rentals are illegal.
Critics of the industry worry that allowing companies such as Airbnb to collect and pay taxes on behalf of the illegal units would effectively conceal the locations and owners of those units, making it harder for county officials to crack down on illegal operators. The city and neighbor island counties have the authority to issue permits and regulate vacation rentals, but many ignore the law and operate without permits.
Airbnb spent tens of thousands of dollars hiring lobbyists and advocating for a similar bill last year that would have authorized vacation rental brokers to register as agents to collect and remit excise and transient accommodations taxes on behalf of operators.
Ige last year vetoed that bill because he said it would have provided a “shield” for property owners who run illegal vacation rental operations. He also worried that last year’s bill would encourage homeowners to rent their properties to tourists at a time when affordable rentals are scarce.
House Finance Chairwoman Sylvia Luke said Tuesday the Ige administration wants to keep the issue alive this year to propose changes in House Bill 1471, but it is unclear how the administration intends to modify the bill. A spokeswoman for the governor said Ige was in Washington, D.C., and was unavailable Tuesday.
State Rep. Sean Quinlan (D, Waialua-Kahuku-Waiahole), addressing Airbnb representatives, said his district has more than 1,000 vacation rentals, “the vast majority of which are illegal under state law, and you guys say you want to partner with the state, but it seems like you’re partnering with us to encourage people to break our own laws.”
He added, “My fear is that right now it’s illegal, and the only thing stopping some people from renting out their home or a second home as a short-term rental is the fact that it is illegal. But if we as a state say, ‘Wink-wink, nudge-nudge, it’s illegal, but we’re going to let Airbnb collect the taxes,’ and we’re simplifying things and we’re making it even easier for people to essentially perform an illegal act, do you guys have any plan to deal with that?”
Matt Middlebrook, public policy manager for Airbnb, said the company often hears those concerns, and said Airbnb wants to work with the counties.
“There are proven ways to work with the local jurisdictions to help prevent some of the problems that you are identifying very clearly that do exist,” he said.
However, Middlebrook said the income from the vacation rentals that flows to property owners is also important. The median income from vacation rentals for the property owners who list on Airbnb is $9,000 a year, he said.
“The affordability of living in Hawaii is a big issue that we recognize, and it’s a concern that we’ve heard quite a bit, but we’ve also heard a lot of feedback from our hosts that $9,000 a year or thereabouts … is a really important source of income to people in Hawaii,” he said.
A third of those Airbnb listings are rented for less than 60 days, while 60 percent were rented for less than 60 days during the entire year, “so we’re not talking all about dedicated vacation rentals,” Wang said.
“We’re also now talking about, as patterns are changing, folks who are doing this one to two weeks a year. We’re seeing that more and more frequently,” she said.
HB 1471 now goes to the full House for further consideration.