The state Senate appears poised to accept a bill tonight that would authorize vacation rental platforms such as Airbnb to collect taxes on behalf of the state, a development that triggered a last-minute lobbying push at the state Capitol today by the hotel industry and the hospitality workers union Unite HERE Local 5 to try to block the measure.
Senate leaders on Wednesday posted a notice that senators would agree to the latest draft of Senate Bill 1292, a measure that would require vacation rental platforms such as Airbnb and Expedia to collect taxes from transient rental operators on behalf of the state.
State tax officials calculate that would raise an extra $52 million next fiscal year if it passes, and lawmakers hope to use that money to finance various initiatives.
However, Gov. David Ige vetoed a similar vacation rental tax bill in 2016, saying that approach would shield property owners who illegally operate vacation rentals in residential neighborhoods where the city and counties do not allow them.
The 2016 bill would have required the online platforms to collect state taxes on those illegal operations without revealing the locations of the rentals to the counties. Ige also said the bill would have aggravated the statewide shortage of affordable long-term rentals by encouraging more property owners to jump into the vacation rental market.
The hotel industry has strongly objected to the spread of illegal vacation rental units that do not comply with county zoning and other requirements — as the hotels must do — and also protests that the illegal rentals frequently do not pay their state excise and hotel room taxes.
This year the state House again proposed in SB 1292 to require vacation rental platforms to collect taxes on behalf of the state. Platforms such as Airbnb would be required to disclose to the Hawaii Department of Taxation the address of each rental, the rental operators’ names and other information, but the state would not share that information with the counties.
That has upset critics of the sprawling vacation rental industry, who contend SB 1292 would effectively condone vacation rental operations that violate county land use ordinances.
State Sen. Laura Thielen (D-Hawaii Kai-Waimanalo-Kailua) said passing SB 1292 would allow the illegal operators “to hide behind Airbnb and VRBO, and we’ll continue to have an increase in illegal operators.”
“In the last two years the number of illegal vacation rentals has increased by 35%,” Thielen said.
A study by the Hawaii Tourism Authority study identified more than 30,000 vacation units statewide that were being advertised in Hawaii on just four booking platforms — Airbnb, HomeAway, TripAdvisor and VRBO — and Airbnb has publicly admitted not all of its clients pay state taxes.
The full Senate is scheduled to meet at 6:30 p.m.