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Ige’s likely rental tax veto bucks trend


    Hawaii Gov. David Ige

Hawaii, one of the top visitor destinations in the world, is bucking a trend now that Gov. David Ige said he intends to veto a bill that would allow online lodging services like Airbnb to collect state and local taxes.

In nearly 200 jurisdictions around the world, Airbnb is collecting taxes on behalf of hosts who rent out private rooms and lodgings, and dozens of cities and counties are clamoring for a similar arrangement with Airbnb, said Chris Lehane, head of global policy and public affairs for Airbnb.

“We would really like to put a pile of tax money there at the bottom of the Hawaii rainbow if we can,” Lehane told the Associated Press. “Most states see this as a huge thing. We are really puzzled.”

While states have debated the right way to regulate private vacation rentals, the National Conference of State Legislatures isn’t aware of any other governor vetoing legislation on short-term occupancy, said Max Behlke, manager of state-federal relations.

The bill passed the state Legislature in May, after debate over the proliferation of illegal campsites and other rentals listed on Airbnb. At one point the bill required Airbnb or other brokers to verify that their rental listings were legal, but that section was removed from the bill after opposition from Airbnb.

“There was a lot of concern expressed by many that the bill would facilitate illegal rentals, and I do have big concern about that,” Ige told the Associated Press. “I do understand the Airbnb model has been very successful, and we need additional vacation rentals to support millions of visitors that are coming to our islands.”

Hawaii’s affordable housing crisis and its status of having the nation’s highest rate of homelessness per capita played into Ige’s decision to put the bill on his intent-to-veto list, he said. “We do know that having properties or accommodations available to residents is part of the long-term solution to homelessness, and I personally would rather have rental units available to residents rather than to visitors,” Ige said.

Lehane says Airbnb wants to work with counties on dealing with enforcement of local laws, but the bill was just a tax collection measure.

He said Airbnb created a policy in San Francisco stating that hosts could only list rentals from their primary homes where they lived. “The principle behind that is to make sure they’re not taking housing off the market,” Lehane said. Chicago is using revenue from Airbnb taxes to address homelessness, he added.

Behlke thought the company had other reasons for pushing back on verifying whether rentals on the website are legal. “If they find out that 35 percent of people offering rooms … aren’t following local laws, they just cut down 35 percent of their market share, and that’s going to cut into their revenue,” he said. “I think that’s what they’re concerned about.”

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  • The law is like having the fox collect the eggs from the chicken coop. The State had to sue the other internet tax collectors to get our Hotel Room Tax. It is the State’s responsibility to collect taxes. Give the Administration more money to hire more Tax Investigators to find the cheats.

    • Good point! Airbnb does not care about collecting taxes. HB 1850 was written by Airbnb lawyers and is a Trojan Horse. They put in language into the bill to hide the illegal operators from the public and county inspectors. As Max Behlke of the National Conference of State Legislatures stated “If they find out that 35 percent of people offering rooms … aren’t following local laws, they just cut down 35 percent of their market share, and that’s going to cut into their revenue,” “I think that’s what they’re (Airbnb) concerned about.” Guess what? Over 80% of the vacation rentals on Oahu are illegal. That’s what Airbnb is trying to hide! As Governor Ige implied, we need homes, not hotel rooms in our neighborhoods…Good job Governor Ige for standing up for Hawaii’a residents and vetoing the bill!

  • I agree with Mr. Ige’s likely veto of this bill. The state and counties need to wake up and come to terms with how to deal with zoning issues and permitting of vacation rentals. Once that is resolved, I agree with proceeding with third party tax collections. AirBnB clearly wants to protect it’s revenue stream, using the promise of increased tax revenue to bribe Hawaii into ignoring illegal vacation rentals.

  • It makes you wonder if any of our elected representatives have ever read the states’ constitution. “Hawaii State Constitution, ARTICLE VII, TAXATION AND FINANCE, TAXING POWER INALIENABLE, Section 1. The power of taxation shall never be surrendered, suspended or contracted away. [Ren Const Con 1978 and election Nov 7, 19780.” On another note, Chris Lehane’s claim that “… nearly 200 jurisdictions around the world, Airbnb is collecting taxes on behalf of hosts who rent out private rooms and lodgings, and dozens of cities and counties are clamoring for a similar arrangement…” means nothing when you take inter consideration how many “jurisdictions” there are around the world. In the U.S. alone there are over 86,000 local governments and in Europe, about 150,000 local and regional authorities.

  • Take a minute and THINK! The visiting people want to have B & B’s and Vacation rentals so they can enjoy the real Hawaii rather the super expensive fake resort areas like Waikiki and Koolina. The new four seasons in Ko’olina is over $800.00 per night + food and drinks. So who can afford that? Normal people, I think not, only the rich can afford that. How many normal Americans get a whole month vacation ??? do you??? what is the difference in a 31 day rental and a 21 day rental??? The problem is a few very vocal Kailua groups that want to NOT SHARE ALOHA and the Kailua area. Hawaii is part of the USA weather we like it or not and we survive because of all tourists not just the super rich. So my guess is B & B & vacation rentals are here to stay so change the rules and get with the program. All HB 1850 does is allow the taxes to be paid properly on all rentals. Isn’t that what the critics want or do they just want to stop visitors from our shores and send them elsewhere. THINK: I know my relatives don’t want the Waikiki rat race and they sure can’t afford Koolina how about your relatives?? are they RICH$$.

    • Valid point, but the problem is that most of the B&Bs are illegal. We shouldn’t be facilitating illegal activity by legitimizing it. Allowing tax collection on what’s against the law does exactly that. Sure, we can make it legal through more licensing, but that should be done FIRST.

    • Vacation rentals are illegal in residential neighborhoods because they don’t belong there. Currently, we don’t have enough homes for our residents. Why should we be turning residential-zoned homes into hotels? Let’s keep residential zoning for residential housing and allow vacation rentals to proliferate in resort and commercial zoning.

  • If people want to run a business, then get a GET license and pay your taxes on that business. If Airbnb owned those rentals, then they collect, and pay the taxes. What’s the problem?

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