Bill would collect $15M in taxes from Hawaii's Airbnb hosts

Published: May. 3, 2016 at 10:28 PM HST|Updated: May. 3, 2016 at 10:42 PM HST
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HONOLULU (HawaiiNewsNow) - Lawmakers passed a bill Tuesday allowing companies like Airbnb to collect and pay taxes on behalf of hosts who list their properties.

Supporters say tax compliance was their top priority, and the measure could lead to nearly $15 million in state tax collections annually from Airbnb hosts.

The legislation, which was requested by Airbnb, was supported by the state Department of Taxation and the Department of Planning and Permitting.

"Hawaii has a vibrant Airbnb community of responsible hosts and guests. Home sharing is an increasingly popular accommodations option, and the significant benefits it provides to both local businesses and thousands of local residents by generating supplemental income and supporting local businesses highlight the importance of this emerging economic sector," Beth Adair, the global head of tax for Airbnb, wrote in submitted testimony.

"HB 1850 would enable Airbnb to ensure full tax compliance and maximum tax revenue collection on all bookings conducted through our platform. It would also simplify administration for both the Department of Taxation and our host community, and reduce the State of Hawaii's enforcement burden in ensuring individual tax compliance," said Adair.

Visitor industry analysts say Airbnb was estimated to have had nearly 250,000 customers in Hawaii just last year.

Opponents say ultimately it wasn't 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 displacing local residents in communities across the state.

"Our quiet residential neighborhoods are turning commercial. Our beaches and ag lots are literally being rented to tourists for $39 - $69 a day. For what? So that Airbnb can collect $3 - $6 in taxes? Is that worth it?" asked state Sen. Donna Mercado Kim, chairwoman of the Senate Government Operations Committee.

Critics of the bill worry it will shield hosts who are listing illegal vacation rentals. They say the measure should have regulated Airbnb to prove property owners are licensed with the state by requiring tax identification on each listing.

"Airbnb basically lets anybody post up as a host. We've been finding in Hawai'i that they've been allowing hosts to put up camp sites, public beaches -- telling people they're going to have to go to the bathroom on the beach -- and so, what I wanted is an amendment where we could actually hold them to standards where we could block that kind of hosting on their site," said Sen. Laura Thielen, (D - Kailua, Lanikai, Enchanted Lake, Keolu Hills, Maunawili, Waimanalo, Hawai'i Kai, Portlock).

"People love to camp, they should have choices and alternatives in costs -- but if we're going to have rule-making and regulations, then everybody has got to play by the same rules," said state Sen. Sam Slom.

All bills still head to the Governor for his signature before becoming state law.

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