The American Hotel & Lodging Association is adding new data to its arguments urging Gov. David Ige to veto Senate Bill 1292, which would authorize vacation rental platforms such as Airbnb to collect taxes on behalf of the state.

AHLA is slated to release a study Wednesday that it commissioned from Dan Bucks, former director of the Montana Revenue Department and previous executive director of the Multistate Tax Commission, which concludes that states and municipalities that have signed similar agreement are losing millions of dollars in tax revenue.

Bucks said after adjusting for different tax systems among the states that the “median state” revenue loss from voluntary tax agreements from Airbnb was $32.45 million in 2018, which translates into a total national loss of federal, state and local revenue of $1.64 billion in 2018 and $3.48 billion over the 2013-2018 period.

“Our best studies show that these rentals only generate about a 2 to 4% net gain in tourism — really they are simply shifting lodging from traditional operators who have a high rate of compliance in paying lodging and other taxes,” Bucks said.

Bucks said Airbnb voluntary agreements give a false impression of revenue gained, when really they are revenue due that already could be gathered. A recent U.S. Supreme Court decision, South Dakota v. Wayfair Inc., provides a pathway for states to mandate that businesses without a physical presence in a state that meet certain thresholds collect and remit sales taxes on transactions in the state, he said.

“The most basic problem with Airbnb’s voluntary agreements is that they don’t allow the states or cities to audit or verify the amounts,” Bucks said.

Troy Flanagan, AHLA senior vice president of government affairs, said opponents to Airbnb’s voluntary tax agreements “have always known that they were bad policy,” but the new data shows “that they are also a drain in finances.”

Kekoa McClellan, AHLA Hawaii spokesman, said Senate Bill 1292 is a “well-laid trap by the platforms to shield their listing of illegal hotels in communities across the state through a preferential agreement.”

McClellan said the bill also makes it more challenging for counties to use the enforcement measures that they already have to counteract the spread of illegal rentals.

“This bill says in so many words that as long as you pay your taxes, it’s OK, we’ll protect you,” he said.

The study is just AHLA’s latest effort to oppose Senate Bill 1292. The organization, along with heads of more than 10 Hawaii hotel companies, sent Ige a letter in May urging him to use his veto power again. 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.

State tax officials have calculated that the bill would raise an extra $52 million next fiscal year if it passes, and lawmakers hope to use that money to finance various initiatives. However, opponents like the traditional lodging industry and Unite Here Local 5 have argued that the bill would condone vacation rental operations that violate county land use ordinances. The Hawaii Tourism Authority also testified against the bill.

Ige, who has not provided any insight on Senate Bill 1292, has until Monday to finalize his intent-to-veto list.

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