Bringing Airbnb on to a ‘level’ playing field
What local lodging wants to see from short-term rental regulations
PITTSFIELD — A task force consisting of Berkshire lodging entrepreneurs is planning to meet with 1Berkshire officials in the coming days to craft a formal statement regarding the fairness of the state's lodging tax.
The meeting comes in the wake of Gov. Charlie Baker's announcement last week that he plans to file a measure to tax short-term rentals of private homes through websites including Airbnb, when the owners of those establishments rent at the rate of a "de facto business" like a hotel or motel.
The proposal, expected to be included in the governor's budget proposal on Wednesday, would require people and businesses that offer accommodations for 150 or more days in a calendar year to collect and remit the state's 5.7 percent room occupancy tax during the following year. Cities and towns in Massachusetts can also charge an additional tax of up to 6 percent, which several Berkshire municipalities have adopted. The new tax would go into effect Jan. 1, 2018.
Entities like Airbnb and VRBO are currently exempt from those regulations, which the owners of several Berkshire lodging establishments believe is unfair, and leaves them at a competitive disadvantage.
A peer-to-peer online marketplace and homestay network that enables people to list or rent short-term lodging in residential properties with the prices set by the property owner, Airbnb has been active in Berkshire County since 2009. The service had begun to thrive locally. Guests staying at Airbnb facilities in Berkshire County generated $13 million in total economic activity in the 12 months ending on Oct. 1, while local households participating in the program earned $3.4 million during that same time span, according to figures supplied by Airbnb.
"We're definitely in support of making this a level playing field for everybody," said local task force leader John Vittori, who co-owns the Garden Gables Inn, a bed-and-breakfast in Lenox. "I think that Airbnb definitely has a role to play and is going to be attracting new visitors to the Berkshires who otherwise might not have come just because of the unique types of lodging they can offer. But they're in direct competition in some instances to what the lodging industry is doing paying taxes and meeting regulations in the Berkshires. I don't think it's fair for them to operate under the radar."
1Berkshire Chief Marketing Officer Lauri Klefos, who headed the former Berkshire Visitors Bureau, said the task force plans to meet with the board of directors of the county's leading economic development agency within the next two weeks.
Based on her conversations with local lodging entrepreneurs, Klefos said two main issues have emerged: the fact that the room occupancy tax doesn't apply to people who utilize services like Airbnb for short-term rentals, and the lack of local enforcement regarding housing issues like fire codes and occupancy limits.
Klefos said she has already spoken with House Speaker Robert DeLeo about this issue. But she declined comment on Baker's proposal because she isn't familiar with it.
"I know he's saying it's going to be expanded but I need to look at the details," she said. "There seems to be a conversation going on nationally on how you define a short-term rental."
State Rep. William "Smitty" Pignatelli, D-Lenox, is very familiar with the local option for the state's room occupancy tax. His father, former town Selectman John Pignatelli, was instrumental in establishing that measure in Lenox 30 years ago, he said. The town currently requires visitors to pay an additional 4 percent above the state's 5.7 percent room occupancy tax threshold..
"Lenox was one of the first to pass [the local option tax]," he said. "That's additional tax money that comes back directly to the community. My dad was the architect of the local option in Lenox, and it literally saved the town."'
Pignatelli said he didn't know a lot about Baker's proposal other than he wants to tax short-term rentals the same as hotels.
"I think it's fair," he said. "But we still have a lot of details to work out."
Given the sums of money that Berkshire entrepreneurs like Joe Toole and Vijay Mahida are paying to build new hotels in the Berkshires, Pignatelli said short term rentals should be under the same requirements.
"Those guys are paying thousands of dollars and they have to pay a tax," he said. "Why shouldn't they have a tax, too."
In a statement, Airbnb said it supported Baker's proposal.
"We're pleased Governor Baker is moving forward on a measure in 2017 to allow Airbnb to collect taxes across the commonwealth on behalf of our host community," said Airbnb spokeswoman Crystal Davis. "Over 592,000 Airbnb guests visited Massachusetts last year and we look forward to working with state lawmakers this year on home sharing rules that are fair, sensible and progressive."
Reach Business Editor Tony Dobrowolski at 413 496-6224.
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