Private tax deals sell Hawaii short.

Proponents of expanding entire home rentals have floated the idea of a so-called “voluntary collection agreement” between the state and short-term rental giants like Airbnb. Let’s be clear: These voluntary collection agreements — which dictate Airbnb’s payment and reporting of lodging taxes — are historically rife with problems. In communities from coast to coast, leaders have spoken out against them, wished they could reverse them, and regret having ever entertained their prospect.

A recent report by state tax expert Dan Bucks shows that these agreements are creating “unjustified favoritism for Airbnb and its lodging operators,” “improperly ceding tax authority to Airbnb,” and “undermining compliance with tax and regulatory laws.” Alarmingly, these agreements are often withheld from the public and the press, inviting the opportunity for other businesses, taxpayers, and citizens to be treated unfairly.

There are even documented instances where Airbnb has placed gag orders on public servants, prohibiting them from discussing the terms of an agreement. These secret deals happen without the input of the Legislature and are blind to public comment.

In a legal settlement solidified this May, Airbnb agreed to important registration, transparency and enforcement provisions in its hometown city of San Francisco. We believe any tax engagement with Airbnb should include the important characteristics of this settlement, which were also incorporated in legislation considered during Hawaii’s 2017 regular legislative session.

We can’t sell Hawaii short. A pono agreement would require Airbnb to collect, transparently report and pay taxes on behalf of its operators renting units in Hawaii through their platform. It should additionally require each operator’s transient accommodations tax registration identification number and local contact information before hosts can post listings in Hawaii on Airbnb.

If the rentals are not legal, Airbnb should not be allowed to collect a booking fee. In March of this year CBRE released a report examining the rise of commercial activity taking place on Airbnb nationwide. The report focused on 13 of the nation’s largest Airbnb markets, which includes Oahu.

The results confirmed the worst: most vacation rental units here are owned by part-time residents or commercial operators, not small homeowners renting a room to supplement their income. In fact, 85 percent of Oahu Airbnb revenue comes from entire-home rentals. More alarming is the explosion of multi-unit entire home vacation rentals springing up in neighborhoods across Oahu. Just last year Airbnb’s revenue from multi-unit entire home vacation rentals on Oahu jumped an astonishing 227 percent.

Most families in Hawaii do not have the luxury of an extra room to rent, let alone an extra house to put on the short-term rental market. We are not opposed to local families sharing their homes to make ends meet. We oppose voluntary tax agreements designed to confer legitimacy to hosts operating primarily illegal entire-home rentals, 27 percent of whom are listing 20 or more entire- home units. That is not home sharing, that is an illegal hotel.

These illegal short-term rentals degrade the quality of life for our residents and worsen the problem of inadequate affordable housing.

Our hotel industry is a healthy and competitive market which welcomes anyone willing to play by the rules. Our stake in this fight is about the communities where our 110,000 Hawaii members and employ- ees live, work and play.

The state Department of Taxation ought to consider what it would be giving Airbnb if, indeed, a problematic agreement was accepted. We urge DOTAX: Pay careful consideration to the San Francisco settlement’s provisions and to the detrimental impact the explosion of illegal entire-home rentals is having on Hawaii.