An agreement between Maine and the home-sharing website Airbnb will ensure that the company is collecting lodging tax from customers who use the site to rent properties in the state.
The company announced Tuesday a voluntary collection agreement with the state that allows it to automatically collect and remit lodging tax on behalf of its hosts beginning April 1. Last year, 3,700 active hosts earned $26 million and hosted 174,000 visitors in Maine, the company said.
It’s unclear how much of those earnings were subject to the state’s 9 percent lodging tax because of complicated exceptions allowed under the tax code, and because Airbnb did not automatically collect the tax from guests. The responsibility for assessing the tax normally falls to property owners that rent through Airbnb. If all the tax were collected last year, it would have added about $2.3 million to the state’s coffers. A typical Airbnb host made $5,900 in 2016, the company said.
“This agreement is a win-win, providing Mainers with a consistent source of revenue to support core public services while allowing Airbnb hosts to benefit from the economic opportunity provided by home sharing,” said Andrew Kalloch, head of Northeast Public Policy at Airbnb.
Hotels have complained that uneven tax collection from Airbnb hosts is one way that short-term rentals have an unfair advantage over traditional lodging because they are not covered by the same rules and regulations. Maine lodging sales were about $950 million in 2016, according to Maine Revenue Services.
To deal with the inequity, the state has proposed a change to the tax rules in the 2018-19 state budget that would require “transient rental platforms” like Airbnb, VRBO and homeaway.com to collect the tax from consumers and send it to the state.
David Heidrich, a spokesman for Maine Revenue Services, declined to comment on the Airbnb agreement Tuesday.
STATE APPLAUDS NEW TAX POLICY
Adrienne Bennett, a spokeswoman for Gov. Paul LePage, said the administration could neither confirm nor deny the agreement, but welcomed the company’s announcement.
“Airbnb’s decision to collect and remit lodging tax to the state of Maine is an important step toward leveling the playing field for many Maine businesses,” Bennett said. “We applaud Airbnb’s decision to begin collections, removing this unnecessary complexity, and making the short-term rental market accessible to even more Maine residents.”
Airbnb collects taxes on its listings in 16 other states, including Vermont, Connecticut and Rhode Island, said company spokesman Peter Schottenfels. As of January 2017, the company remitted $175 million in hotel, tourist and occupancy taxes to more than 220 cities and communities across the world, he said.
In Maine, the number of guests renting properties through Airbnb doubled from 2015 to 2016, Airbnb said. The typical listing in Maine is occupied 30 days out of the year and the average length of stay is 2.7 nights.
As the service’s popularity has grown, cities and towns in Maine and across the U.S. have scrambled to create rules for short-term rentals that often do not clearly fit into existing zoning and business regulations. Communities such as Bar Harbor, Rockland and Cape Elizabeth have created rules for short-term rentals.
PORTLAND COUNCIL DRAFTING RULES
The Portland City Council is expected to debate a set of rules for short-term rentals within two months. The rules were drafted by the council’s Housing Committee after six months of debate. In a statement released after a Feb. 8 housing committee vote to recommend regulations to the council, Schottenfels commended the city’s efforts to “craft a thoughtful, innovative approach to regulating home-sharing in Portland.”
“We look forward to continuing to work with the council to pass regulations that foster, rather than inhibit, the economic opportunities of home sharing,” he said.
Critics in the city say short-term rentals take up housing needed for full-time residents and degrade neighborhood character. Hosts and supporters argue that short-term rentals provide valuable supplementary income to pay bills and taxes, and offer guests an alternative to traditional lodging.
Portland’s proposed rules include annual fees, a 300-unit cap on the number of short-term rentals in non-owner-occupied homes, and a ban on short-term rentals in single-family homes that are not the primary residence of the owners.
Airbnb has clashed with other cities, including New York City and San Francisco, that have passed strict rules. In other places, like New Orleans, Airbnb worked with city officials to draft regulations it favors.
Peter McGuire can be contacted at 791-6325 or at:
Send questions/comments to the editors.
Comments are no longer available on this story