State moves closer to collecting tax for online vacation rental - Hawaii News Now - KGMB and KHNL

State moves closer to collecting tax for online vacation rental listings

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WAIKIKI (HawaiiNewsNow) -

A bill that would authorize Airbnb and similar companies to collect state taxes from both legal and illegal vacation rentals when accepting online bookings in Hawaii is moving through the Legislature, but some lawmakers remain skeptical about the measure.

The complicated issue is now headed to a vote before the full state House.

This isn't the first time that lawmakers have sought to create stricter oversight of Hawaii's growing vacation rental industry, which is largely unregulated.

Last year, legislation aimed at allowing alternative accommodation websites like Airbnb to collect taxes on behalf of their hosts was vetoed by the governor.

The Ige administration has asked lawmakers to keep the issue alive with an intent to propose changes, though it's unclear what the governor wants to do with the bill, the Honolulu Star-Advertiser is reporting.

Ige said he vetoed last year's legislature because it would have provided a "shield" for property owners who run illegal vacation rental operations. He also worried that last year's version of the bill would encourage homeowners to rent their properties to tourists at a time when affordable rentals are scarce.

The city and neighbor island counties have the authority to issue permits and regulate vacation rentals. In testimony before the House Finance Committee, policy directors for Airbnb said the company had more than 8,300 listings statewide last year, but just how many of those are illegal is unknown.

Visitor industry analysts say Airbnb was estimated to have had nearly 250,000 customers.

One Airbnb manager testified that the median income from vacation rentals for the property owners who list on Airbnb is $9,000 a year.

Supporters of similar measures have said tax compliance is their top priority.

They said last year's measure could have led to nearly $15 million in state tax collections annually from Airbnb hosts.

But opponents say it's ultimately not a question of whether to allow Airbnb to collect tax payments, but whether to use the legislation as an opportunity to create stricter oversight of an industry that has led to the creation of a large number of illegal vacation rentals

For years, lawmakers have sought to address the issues caused by short-term, illegal vacation rentals. Among them: That the rentals exacerbate the hot housing market and push out residents.

About one quarter of the state's total lodging inventory is made up by vacation rentals, most of which are operated without the proper government approvals, according to the Hawaii Tourism Authority.

According to experts, the illegal rentals translate into more than $100 million in uncollected transient accommodation taxes.

Experts say the number of vacation rental listings have skyrocketed in recent years, due in large part to online advertising.

On Oahu alone, there are an estimated 3,700 illegal vacation rentals and only 830 "grandfathered" legal listings, which were around before the county outlawed the practice in 1986.

Of the 88,041 total lodging units in the state, 22,238 are individually-advertised units or vacation rentals, a 2014 study by the Hawaii Tourism Authority showed.

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