Airbnb has been trying to win over regulators and lawmakers in New York by pledging to crack down on illegal hotel operations and collect taxes from rentals that happen on its platform. In an effort to get new regulations passed to legitimize its service in NY, the company put an estimate of just how much the city and state is missing out on by not allowing it to collect taxes there.
In a letter to the NY State Legislature and NY City Council today, Airbnb global policy chief David Hantman estimated that Airbnb could collect as much as $65 million in hotel occupancy taxes this year, and that number would only increase over time.
In fact, that number has already grown rapidly — from $21 million that Airbnb had estimated it would contribute in taxes to New York just nine months ago.
There’s just one catch: Before Airbnb can begin collecting and remitting those taxes, the state and local governments in New York would first need to create a new legal framework for it to do so. Airbnb is hoping New York lawmakers will follow those in San Francisco and Portland in that regard by creating regulations that make renting out your home legal in that market.
The latest letter follows a continued back-and-forth between Airbnb and regulators in New York, where it has come up against opposition from NY Attorney General Eric Schneiderman. The Attorney General contends that as many as 75 percent of rentals on Airbnb are illegal under current law, and has sought to force the company to shut down illegal hotel operations on the platform.
The fight goes back nearly 18 months, when the AG’s office issued a subpoena requesting data about Airbnb’s host listings in the state. After a lengthy legal battle, Airbnb eventually agreed to hand over data about 124 hosts that had multiple listings.
The company and Attorney General have reached a bit of a detente, although the AG’s office declined to comment as its investigation is ongoing. After all, Airbnb has not attained legal status in New York and will need the help of state and local lawmakers for that.
Could $65 million in taxes help convince them? Only time will tell.
Hantman’s letter is below:
As you and your colleagues continue your work, we want to express our eagerness to work together on fair, progressive rules for home sharing. Today, technology is making home sharing safer and more transparent than ever before and millions of New Yorkers have used Airbnb and the sharing economy. We strongly believe home sharing in New York should be subject to smart regulations and hope you will continue to lead this important conversation.
To date, hundreds of thousands of New York have used Airbnb to find unique and authentic travel experiences and more than 25,000 are opening their homes to visitors from around the world. 87 percent of these hosts are sharing only the home in which they live and most share their space only on an occasional basis. Additionally, the majority of hosts use the money they earn to pay their bills and stay in their homes.
This activity provides substantial economic benefits to all New Yorkers. In 2014, the Airbnb community generated an estimated $768 million in economic activity in New York and provided an opportunity for more travelers to visit New York. These guests paid an estimated $33 million in sales tax and spent money in local businesses.
We understand that important policy questions have been raised about home sharing and we want to work with you as we move forward. To that end, we want to suggest some common-sense regulations that we believe can be the basis for our continued discussions about these issues:
1. Stop Illegal Hotels: Illegal hotels are bad for New York City. The Multiple Dwelling Law was designed with a noble aim, to stop people from operating illegal hotels in residential areas. We believe the law should be strengthened, with tougher penalties for unlicensed hotel operators and amendments that protect regular New Yorkers who wish to share their space.
2. Share The Home in Which You Live: New Yorkers should be able to responsibly share the home in which they live. Current law prevents many people from even renting their primary home one weekend a year if they are not present during the rental. The law should be carefully amended to make it possible for regular people to occasionally share only the home in which they live, while not providing loopholes for illegal hotels to operate.
3. Help Our Community Pay Taxes: Airbnb has offered to collect and remit hotel and other tourists taxes on behalf of our hosts and guests. We have done so in communities like San Francisco and Portland and will expand this program to cities like San Jose and Amsterdam in 2015. Unfortunately, current law has prevented us from implementing this program in New York. We estimate that New York will lose out on $65 million this year alone and that figure will only increase in the future. These resources could fund valuable public services and should not go uncollected. We should amend the law to help ensure our community can contribute even more to the City and State.
4. More Resources to Fight True Illegal Hotels: The City and State should allocate some portion of the $65 million to increase enforcement against true, large scale illegal hotels.
5. Help New Yorkers Who Need it Most: Current law prevents anyone in a rent regulated apartment from sharing their home – even when they are present. We strongly support smart regulations that prevent abuse , but prohibition is not the answer. Home sharing can be an important source of income for many New Yorkers who are struggling to get by in an expensive city. We support responsible rules that allow residents to share the home in which they live. These rules should prohibit residents of rent-regulated apartments from earning more through home sharing than they pay in rent each month.
Thank you again for advancing this important conversation. We look forward to participating, discussing new regulations, and answering any questions you may have.
Global Head of Public Policy