Senate set to tax Airbnb

Lawmakers eye the tax extension to level the field; say the industry supports it

THE SENATE WILL take up a proposal to extend the hotel tax to home-sharing apps such as Airbnb and Homeaway, the latest effort to rein in and reap revenue from the wildly popular technologies driving the so-called sharing economy.

Sen. Michael Rodrigues of Westport says the measure merely “closes a loophole” that allowed the apps to operate as rentals but not pay the state’s room tax like traditional hotels, motels, and bed and breakfasts do.

“We heard from a number of cities and towns, primarily communities down the Cape, that wanted to be able to collect their local rule occupancy taxes,” said Rodrigues, the chairman of the Joint Committee on Revenue and a chief proponent of the bill. “This is very similar to the Uber-taxi debate, this industry called room-sharing. These are industries and concepts that were not around when the tax laws were passed.”

The apps work by allowing people with rooms, apartments, or houses to offer their homes via a website or smartphone app to visitors looking for short-term rentals at lower costs than hotels, much the way private drivers use their own cars to pick up passengers through Uber and Lyft instead of riders hailing a cab.

Officials at Airbnb and Homeaway, the two most prominent home-sharing companies, did not immediately respond to requests for comment but Rodrigues said lawmakers have been working with Airbnb on the measure and he said the company is on board.

“We worked with the industry for the last year on this,” Rodrigues said. “Airbnb and the others are in complete support of what we are doing. They’re all fairly new companies. They want to be legitimatized. It’s an industry millennials certainly are aware of but they want to go beyond that.”

The measure has been written into an economic development bill passed by the House, which did not include the hotel tax. The money is earmarked to pay for a boost in the Earned Income Tax Credit, which was also added by the Senate, hiking it from 23 to 28 percent for more than 415,000 low-income families.

Rodrigues said estimates from the Department of Revenue indicate the change in the hotel tax would bring in an estimated $13 million to $20 million a year to the state and a similar amount to cities and towns that have the local option tax, but he said he thinks the popularity of the service will make the haul bigger from the outset.

“These apps right now are about 15 percent of market and it’s growing exponentially,” he said. “I think those numbers are grossly understated. I think it’s going to be closer to $30 million and it will grow.”

Under the Senate bill, the 5.7 percent state tax on so-called transient housing will go into effect on January 1, 2017. The increase in the earned income tax credit, which is projected to reduce revenues by $50 million in the first year, will begin a year later but the first time anyone can file for it will be with their 2018 taxes in 2019, giving the state two years to sock away the money to pay for the credit.

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Jack Sullivan

Senior Investigative Reporter, CommonWealth

About Jack Sullivan

Jack Sullivan is a veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe.

He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment.

Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members.

At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

A Boston native, Jack has lived in Massachusetts all his life. He was a major in English and history with a minor in political science at the University of Massachusetts, Boston. A father and grandfather, he lives in Plymouth with his wife, Susan.

About Jack Sullivan

Jack Sullivan is a veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe.

He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment.

Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members.

At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

A Boston native, Jack has lived in Massachusetts all his life. He was a major in English and history with a minor in political science at the University of Massachusetts, Boston. A father and grandfather, he lives in Plymouth with his wife, Susan.

“We are helping to lift hundreds of thousands of working families out of poverty,” Senate President Stan Rosenberg said in a statement. “The Earned Income Tax Credit is one of the most powerful tools we have to grow the economy. Heads of households will put $300 more a year in their pockets, and be able to better provide for their families.”

The full Senate will take up the economic development bill on Thursday and assuming it passes, it will then go to a conference committee to work out the differences with the House version. House officials, who were caught off-guard by Senate’s inclusion of the home-sharing tax, had no immediate comment, saying they were waiting to see what the final Senate bill looks like so they could compare it to the House version.

Rodrigues said he has worked with his House counterparts on a standalone measure to extend the hotel tax to Airbnb and others and said his co-chair on the revenue committee, Rep. Jay Kaufman, was supportive of the concept.