KAILUA-KONA — Two bills designed to let vacation rental companies, such as Airbnb, VRBO and Homeaway, collect taxes on behalf of those who rent out short-term accommodations on those platforms were heard by the state House Tourism Committee on Tuesday.
While one bill is substantially similar to one the governor has previously vetoed, the other proposes new rules and restrictions on the operation of vacation rentals in the state. The committee on unanimously recommended both measures be passed with amendments.
Rep. Richard Creagan is listed as an introducer for both of the bills.
“People who are providing these vacation rentals should pay taxes just like everyone else does,” said Creagan, whose district covers from Keauhou in North Kona to South Point in Ka’u, on Tuesday.
Much like the bill Gov. David Ige vetoed last year, H.B. 1471, as proposed, would allow rental companies to collect taxes from its users. Unlike the last bill though, this iteration specifically directs the collected revenue toward a variety of state funds, such as the convention center enterprise special fund and the tourism special fund. The designated funds are prioritized in a way that when each account is funded to a certain level, revenue is then deposited into the next special fund.
Included among them is $93 million for each fiscal year after 2016-17 that would be divied up among the state’s counties.
Hawaii County would get 18.6 percent of that, close to $17.3 million, according to the bill’s text. Each county would also get $1 million for fiscal 2017-18 to go toward compliance and enforcement of the tax.
Airbnb public policy manager Matt Middlebrook said in an email that Airbnb has collected tax revenue from more than 220 jurisdictions since 2014, representing about $175 million in revenue.
He said had the law been in place, the company could have collected and remitted $26 million last year and $15 million the year before.
The second bill, H.B. 1470, likewise allows rental companies to collect taxes on behalf of users, but also puts in place several additional legal requirements, such as requiring host platforms to report operator information in tax returns and requiring platforms to remove listings that don’t comply with local and state laws.
The bill also limits operators to a single rental property and caps the number of days a property can be rented at 60 days a year. Additionally, the bill adds a surcharge equal to 4 percent of the gross annual or leasing charge. That would be in addition to all other taxes required by state law.
That money, the bill states, would go toward services for the homeless.
Finally, the bill would require short-term rental operators to keep for three years records about all bookings, including how many people stayed at the unit and for how long.
The two bills attracted divided opinions from government agencies, labor groups and hospitality companies.
In testimony Airbnb submitted to the committee, that company slammed the latter bill, saying the bill was “crafted by Hilton Hotels.”
Hilton did not respond to a phone call as to what, if any, involvement the chain had in drafting the legislation.
“The Hilton bill, put simply, is the height of self-interest,” wrote Middlebrook in a letter to the committee.
Middlebrook went on to argue that the hotel chain put the bill forward “in an attempt to overly restrict homesharing.”
The company instead voiced its support for the alternative bill, arguing it would let the company “ensure full tax compliance” and simplify the collection process for the Department of Taxation and reduce the burden of enforcing compliance with local tax laws.
Hilton, however, submitted legislation in strong support of the bill opposed by Airbnb.
The company’s testimony didn’t include any reference to involvement in the creation of the legislation. In their testimony, Hilton Area Vice President Gerald C. Gibson said the bill strengthens the state’s ability to ensure rental operators are complying with state law.
“Like hotels, motels and other transient accommodations, hosting platforms and short-term rental operators should also pay the applicable taxes and comply with land use laws,” Gibson wrote.
Marriott Hawaii’s area general manager submitted a nearly identical letter also in support of that bill.
A hospitality labor group was also among those who submitted testimony in favor of the bill while a number of locally owned rental companies and individual operators, as well as the Hawaii Association of Realtors registered their opposition.
Hawaii Tourism Authority data from last year shows 7 percent more visitors stayed in vacation homes in Hawaii last year compared to the year before, according to the Associated Press. That outpaced the 3.5 percent increase in visitors staying in hotels.
