Airbnb's Proposed Tax Agreements With Cities Raise More Questions Than Answers
Skift Take
Airbnb is doing all it can to become legalized in cities like New York and Los Angeles by saying it'll pay occupancy taxes, just like hotels do. But if you look at the math and the overall economic impact, is that money really enough to have a positive net impact on those cities?
Of the only two certainties in life — death and taxes — Airbnb is hoping that the latter will help them stay alive and legally thrive in cities around the world.
In cities across the U.S., especially, Airbnb's strategy toward the path of legalization is to pay taxes, or help its hosts pay the appropriate taxes owed to local city, county, and state governments.
This seems like a simple, straightforward enough approach. Airbnb seems to be saying to local cities, "We want to pay taxes; we want to give back to the local communities and pay our taxes, just like hotels do."
And if you're a city, why wouldn't you want that additional tax revenue? Every little bit helps, doesn't it?
This is why Airbnb sent Chris Lehane, its global head of public policy, to meet with hundreds of American mayors in January at the U.S. Conference of Mayors. There, Lehane made his plea to mayors, saying that if the 50 biggest cities in the U.S. were to team up with Airbnb to collect taxes, they could have collectively received an estimated $200 million in taxes from Airbnb last year.
Airbnb has seen some success with this strategy, in cities that include San Francisco and Portland, Oregon, both of whom have agreed to partner with Airbnb to collect and remit hotel, occupancy, and tourist taxes. To date, Airbnb has brokered these Voluntary Collection Agreements (VCA) in more than 100 cities around the world. On April 12, Newark, New Jersey's largest city, became the latest municipality to sign a tax agreement with Airbnb.
But other cities, notably New York City and Los Angeles — two of Airbnb's biggest markets according to a January 2016 CBRE report — have not yet committed to these types of agreements.
Why don't these cities just take the tax money from Airbnb and leave it at that? Well, that's a much more complicated issue and it isn't just about the money. It's about Airbnb's potential impact on local communities and businesses, and how the platform is enabling "Super Hosts," or commercial operators, to profit from its platform by listing multiple units or listing a unit or units full time. That right there is at the heart of a brewing battle between Airbnb and local city governments (New York especially) and hotel industry associations like the American Hotel & Lodging Association (AH&LA).
If you were to ask Airbnb the primary reasons for some city mayors' resistance to legalizing Airbnb, the company would appoint the hotel industry as the mai
