This week, the Massachusetts Senate passed a bill that would apply the state's hotel tax to Airbnb units and other short-term rentals. The proposed change could raise an estimated $25 million a year for the state.
After weeks of negotiations, the House and Senate lawmakers reached an agreement this past weekend for a bill that would tax and regular short-term room rentals.
The House voted to accept the conference committee report Monday by a vote of 118-30, with the Senate voting 30-8.
The bill would apply the standard Massachusetts 5.7 percent lodging tax to short-term rentals.
Cities and towns can add another 6 percent local tax on the rental units - 6.5 percent for Boston - and another 3 percent if the owner runs two or more units in the same municipality. Rentals on Cape Cod and the islands are subject to a 2.75 percent tax slated for wastewater issues.
The short-term rental market has exploded in recent years due to the advent of Airbnb.
State officials have taken notice of its impact on the hotel industry and concerns over investors buying up homes or condos just to rent out the rooms by the day or week - contributing to a shortage of available permanent housing.
"It goes a long way toward leveling the playing field for all lodging businesses while maintaining a welcoming environment for new home-sharing platforms," remarked Paul Sacco, President and CEO of the Massachusetts Lodging Association.
On the other hand, Airbnb criticized the original bill as "onerous and overly burdensome". Senator Ryan Fattman, R-Webster, argued that with the proposed bill, "We are essentially taking a group of people - students, seniors, middle-income families - and treating them as if they are the Hilton corporation".
The tax would not apply to owner-occupied ben and breakfast homes with fewer than four units, which are exempt from taxes today.
The proposed taxes would take effect in January 2019 for all units booked after the first of the year.
With Senate approval, the bill will now go on to Governor Charlie Baker.
Baker has remarked in the past that he wants to tax short-term rentals to "level the playing field" with existing hotels. But he has also opposed prior versions of the proposal because of who would be subject to the tax. With this bill, whomever receives payment from the consumer is the one being taxed. Baker has not publicly taken a position on this new version of the bill.
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