Don’t embolden vacation-rental scofflaws via tax

In a regrettable case of deja vu, state lawmakers on Tuesday narrowly approved the so-called Airbnb bill, which authorizes vacation rental platforms to collect taxes from hosts, but unfortunately, shields the online platforms from accountability for doing business with illegal hosts. And there’s a growing proliferation of such outlaws in Hawaii.

In Honolulu County alone, where new short-term rental permits were last issued in 1989, there are about 800 legal rentals but an estimated illegal inventory of at least 8,000.

Under the stripped-down version of Senate Bill 1292, host information collected — including the names and addresses of proprietors — would be kept confidential. Three years ago, when lawmakers passed similar tax-broker legislation, Gov. David Ige rightly vetoed the measure, saying he was concerned it would spur further growth of rentals lacking county permits.

In Hawaii, transient accommodations and general excise taxes that short-term rental hosts must pay are levied by the state — but the permits needed to operate a rental are issued by counties.

Donovan Dela Cruz, chairman of the Senate Ways and Means Committee, who led the charge for SB 1292, pitched it as a means to an estimated $46 million in annual revenue to help pay for a raft of state priorities, such as Filipino burial grants, suicide prevention efforts and a commission to oversee the state’s correctional system.

But since much of the new tax collection likely would be drawn from illegal hosts, the state essentially would be complicit in the sketchy house-sharing industry taking root here. That’s an unacceptable money grab. What would be acceptable is transparency-based legislation that makes sure government gets its due tax revenue while pinpointing illegal operations for county-imposed penalties.

For several years, here and in other visitor-magnet areas, online platforms have balked at calls for online transparency and policing. Even so, state and county governments should push for it.

Airbnb and other platforms assert that the First Amendment and the federal Communications Decency Act (1996) shield web providers from liability for third-party content on their sites. However, recent court challenges are effectively disputing the scope of that protection.

For example, the 9th Circuit Court of Appeals recently reaffirmed a Santa Monica, Calif., ordinance that holds hosting platforms liable for booking short-term rentals that aren’t permitted by the municipality. The ruling supports the laudable assertion that the Communications Decency Act does not give the go-ahead to a lawless no-man’s land on the internet.

Hawaii should insist upon securing the same level of responsibility here. Oahu’s vacation rental woes are similar to those in Santa Monica in that both municipalities are struggling to balance inventories tied to the competing demands between long-term affordable rentals for residents and vacation rentals for tourists, which can often generate more money for the host.

The governor should veto SB 1292, in favor of a better bill next year that collects taxes but also enlists online-platform data for needed enforcement.

Meanwhile, there is renewed urgency for Honolulu’s City Council to move on two bills, which are worded to mirror language in a Santa Monica’s ordinance.

The current version of Bill 89 would allow the city to issue up to 1,715 new permits for hosted bed-and-breakfasts; there would be no new “whole home” unhosted transient vacation units (TVUs) allowed. That appears to be a sensible step forward, as TVUs generate the most neighborhood complaints about noise, illegal parking and other matters.

Also among Bill 89’s provisions: illegal operators would be hit with stepped-up penalties, with technology folded in as key to enforcement. The latest draft of Bill 85 requires advertising short-term rental hosts to list their permit numbers or, if in hotel-resort zones, their street addresses.