A tax on short-term rentals, a staple of summer life on Martha’s Vineyard, was approved 31-6 in the state Senate last Wednesday, moving it a step closer to reality.
According to a State House News Service report, the Senate-approved bill would generate $34.5 million in new state revenue and $25.5 million from municipal taxes. Similar to hotels, the bill allows local towns to add a surcharge to benefit from the taxes.
Short-term rentals are often linked to platforms like Airbnb, though there are other services out there, such as real estate companies that offer seasonal rentals.
The Senate bill has different elements from a House version that was passed 117-30 on March 22. Those differences will have to be worked out by a conference committee before it goes to Gov. Charlie Baker. The House version calls for three different tax rates depending on the number of units an owner rents, and requires a short-term rental registry be kept by the Department of Revenue, according to the State House News Service.
Though it’s billed as leveling the playing field, not everyone agrees.
Larry Gomez, who owns Greenwood House, a Vineyard Haven bed and breakfast, said he is forced to get a license through the town. “I have to be inspected by the building inspector and fire department; all these other people who use Airbnb, are they inspected?” Gomez said. “I don’t think so. A lot more people are not going to be paying taxes unless the town negotiates with Airbnb to collect the tax and pass it on to us. I guarantee my income this year will be 25 percent less than last year because of Airbnb. I’d be better off signing up with Airbnb and dropping the town license.”
John Tiernan, co-owner of Dockside Hotel in Oak Bluffs, offered a different perspective. “I get crucified on social media every time I mention this tax as a good thing, but we’re not talking about income tax or a real estate tax, and nobody who rents on Airbnb cares about tax. They’re still probably getting a room for a lot less than a hotel,” Tiernan said. “An occupancy tax mitigates all the things we have to pay for, trash, policing, roads, wastewater. Only 5 percent of the transients here on Martha’s Vineyard contribute to that. Why would you be against getting money from tourists? Why shouldn’t they help pay for the public services they use? I want that extra money for the town of O.B. It’s not going to be a big burden on the homeowner. It’s not about putting the little old lady who rents out a room out of business.”
Jeff Kristal, who owns the Crocker House in Vineyard Haven, offers the perspective of an inn owner and a member of the town’s finance committee. “We’ve had pressure from that, but we’ve learned to overcome the loss of rooms with more creative marketing,” he said. “We let people know we’re inspected by fire chief, health inspector, and building inspector, and we have a safe establishment; you couldn’t prove that with an Airbnb rental. So I think the legislation levels the playing field on two fronts: one, the safety of our tourists, and two, the towns will see more revenue from the local option tax. The 11.7 percent that we would be getting from Airbnb, Homeway, VRBO rentals is quite substantial.”
The vote marks the third time the Senate has passed similar legislation, the State House News Service reported.
The Senate’s bill extends the existing lodging tax of 5.7 percent, the local-option room occupancy tax, and convention center financing fees to short-term rentals, and leaves regulations like registration, licensing, or inspection up to municipalities, the news service reported.
“The short-term rental economy is the latest example of a rapidly growing, technology-driven industry that is changing the way business is run in the commonwealth,” Sen. Michael Rodrigues of Westport, who sponsored the original version of the Senate bill, said in a statement. “In addition to leveling the playing field in the lodging industry, this legislation ensures each city and town maintains local control, and balances innovative opportunities for the community with the need to regulate and permit safe, secure, and reliable transient accommodations.”
While Airbnb has called the House bill “onerous and overly burdensome,” the Massachusetts Lodging Association, which represents the hotel industry, pushed back strongly against the Senate bill, the news service reported.
“Today, the Senate capitulated to Airbnb by failing to produce even the most basic of health, safety, and consumer protections while continuing to allow wealthy investors to convert scarce housing stock into illegal, unregulated, and unwelcome de facto hotels in residential neighborhoods,” Paul Sacco, the association’s president and CEO, said in a statement. “Even the taxation portion of their bill gives unique rights to Airbnb that no other company in the state is entitled to — taxation without verification. We hope that the conference committee will do more to protect residents and guests and ensure this $31 billion multinational corporation is accountable for paying its fair share.”
Airbnb issued a statement applauding passage of the Senate bill, and saying the company looks forward “to sharing the feedback from our community as the legislative progress continues.”
The bill passed on a nearly party line vote, with Sen. Kathleen O’Connor Ives of Newburyport the only Democrat to oppose it, and Republican Sens. Vinny deMacedo of Plymouth and Richard Ross of Wrentham bucking the rest of their caucus to vote in favor.
Minority leader Bruce Tarr of Gloucester called the bill a “bonanza of taxation,” and said it would treat homeowners who rent out rooms as if they were businesses.
Reporter Barry Stringfellow contributed to this report.