Airbnb says it would have hauled in $64M in taxes for Hawaii last year

If the vacation rental platform Airbnb had been authorized to collect taxes on behalf of the state last year, it would have hauled in $64 million in Hawaii hotel room and excise tax revenues, the company says.

The company made that claim in a letter to Gov. David Ige Wednesday urging him to sign Senate Bill 1292, a controversial measure that would make Airbnb and other vacation rental platforms agents of the state for tax collection purposes.

Matt Middlebrook, head of public policy in Hawaii for Airbnb, said in the letter the company expects the total tax take would “greatly exceed” $64 million because the bill would require other vacation rental platforms such as HomeAway, TripAdvisor and VRBO to also collect taxes on behalf of the state.

“We want to help our community pay its fair share of taxes and remain committed to being a good partner to the state,” Middlebrook wrote. The company based its tax calculations on business it conducted in Hawaii from April 1, 2018 to March 31, 2019, according to the letter.

However, it is unclear how much of that $64 million in excise and hotel room taxes is already being paid without assistance from Airbnb. Many vacation rental operators say they already file and pay their own state taxes without the involvement of the vacation rental platforms.

A Hawaii Tourism Authority study identified more than 30,000 vacation units statewide that were being advertised on the Airbnb, HomeAway, TripAdvisor and VRBO booking platforms, and Airbnb has publicly acknowledged not all of its clients pay state taxes.

SB 1292 has been criticized by residents who say it would provide cover for illegal vacation rentals that have spread across Oahu neighborhoods, but lawmakers adopted the measure this year anyway in the hope it would provide extra revenue to help balance the state budget.

Kekoa McClellan, Hawaii spokesman for the American Hotel and Lodging Association, has called the measure “appalling.”

“This is exactly what Airbnb has wanted for years,” McClellan said in an interview last month. “This bill will create a special treatment for hosting platforms and will allow them hide the illicit activity of these illegal hotels that are ruining our neighborhoods.”

Ige vetoed a bill similar to SB 1292 in 2016, citing a similar objections to the measure. A spokeswoman for Ige said Wednesday the governor is still reviewing it and other bills, and has until June 24 to announce whether he intends to veto the measure.

Meanwhile, the vacation rental platforms have raised their own objections to the bill.

The measure would require vacation rental companies to provide state tax officials with the names of the vacation rental operators and locations of the rentals they book, but Expedia has said it cannot disclose the identities of its clients unless the state subpoenas that information.

The vacation rental platforms are required to keep their clients’ information confidential under the federal Stored Communications Act, according to an Expedia spokeswoman.

Airbnb raised similar concerns in its public testimony on SB 1292 last month, but the company said through a spokesman Wednesday it is now willing to comply

with the final version of the bill.