The Baltimore, Maryland City Council rejected a proposed tax on consumers using Airbnb, a peer-to-peer economy business, and other “homesharing” companies.
The proposal, voted down in October, would have applied the city’s 9.5 percent hotel excise tax to services such as Airbnb, a company connecting tourists seeking short-term housing and hosts who provide places to stay.
Romina Boccia, deputy director of The Heritage Foundation’s Thomas A. Roe Institute for Economic Policy Studies, says Airbnb and other peer-to-peer short-term rental companies are different from hotels and should be treated differently by lawmakers.
“Homesharing is not really a new concept,” Boccia said. “It has been going on forever. Since people began living in homes, they have been sharing them and inviting people into their homes for compensation. A more formalized concept of this is the bed-and-breakfast and inn, which are different from hotels. Many counties and cities do treat bed-and-breakfasts different from hotels, and [they] are not necessarily subject to hotel tax.”
Government Cash Grab
Boccia says lawmakers use hotel taxes to gouge tourists visiting their cities.
“In many jurisdictions, hotel taxes are bad policy and are many times are higher than sales and use taxes in that state or jurisdiction,” Boccia said. “The reason is that local officials are trying to milk tourists for dollars. I think it would be a mistake to apply hotel taxes to the hospitality industry more broadly, including alternative arrangements like home-sharing.”
Room Enough for Both
Nick Zaiac, a policy analyst at the Maryland Public Policy Institute, says Airbnb and hotels can peacefully coexist.
“What we’re seeing is that the hotel industry is really growing right now,” Zaiac said. “The taxes are way up, and there’s definitely a place for Airbnb in that.”
Zaiac says Airbnb merely spreads opportunities for people to be paid for the use of their property.
“The business activity itself helps democratize and spread around the ability to host people in an individual’s home,” Zaiac said. “This is an everyman’s tool for making a little bit of money for the house that they own, and we shouldn’t be discouraging that.”