Airbnb makes small admission on tax issue, saying its hosts should pay
sfbg.com
sfbg.com
To expect Airbnb research hotel laws and taxes in every country they operate in seems like an undue burden.
In fact, it's such a burden, that I'm sure Airbnb will support it in a few years time as a way to raise the barriers to entry on their industry.
They do not offer insurance and serve as mediator during disputes.
They do not operate concierge services.
They operate significantly less like a hotel than airbnb.
1) A place where you pay someone to stay overnight.
2) A website that helps people find and pay for #1.
Personally, as a customer, I would like to see them take care of collecting any necessary taxes, so that I can use the service in good conscience. If putting my place up on Airbnb requires me to collect extra cash and figure out how to get it to the city, there is no way I'm doing that.
Edit: Followup. Also, in a recent WSJ article within the past 2 weeks, they discussed Orbitz's (possibly Expedia's) use of tax collection arbitrage to earn extra profits. Basically, Orbitz collects tax on the retail price charged to a customer for booking a website on their hotel room...but Orbitz only pays the hotel the wholesale price, on which the tax is calculated. Orbitz remits the wholesale-based amount to the hotel, which remits the amount to the state. For example: if a room is booked for $120 in a 10% hotel-tax jurisdiction directly through the hotel, the tax would be $12. However, if it is booked through Orbitz for $100,the hotel tax due is the amount Orbitz pays the hotel to book the room, which is usually a reduced/wholesale price of say, $80, resulting in an $8 tax. Orbitz doesn't reduce the tax collected from the customer--it still charges $10, but it keeps $2. Needless to say, this is actually a large source of profits for Orbitz, and for tax reasons actually lets them manage profits by booking a liability for the taxes on the theory they could eventually be liable for remitting the entire $10.
Maybe that was specific to my state, but I would be highly surprised.
I'll have to dig up that WSJ article. It sounds interesting.
The VERY slippery slope this issue leads to is that NYC and San Fran can sink their claws into the hotel taxes, then won't these entities paying the hotel tax suddenly need to be compliant with hotel regulations, for example, fire exits, accessibility, etc as well as commercial insurance requirements, commercial business licensing, etc.
This is a very dangerous road down which we travel. The interesting thing is to look behind this fight. I'm pretty certain that there's a Marriott, Holiday Inn or some other hotel conglomerate "donating" money to certain politicians to put pressure on AirBnb. Much like the large taxi companies put pressure on city governments over Uber.
Put down the organic soy latte and turn down the Vampire Weekend and stop voting for these jackasses! Call their office and tell them -- if you want to apply 20th century paradigms to 21st century innovations, then you aren't qualified to be in office and I'm not voting for you. (Or something to that effect.)
A burden? More like a flagrant abuse of the law. It's hard to believe that Airbnb didn't bother researching the law in San Francisco, the very same city the company was founded in.
Existing laws will be written with hotels in mind. If J. Random Startup went to the city and said, "Hey, we want to try this new thing," at best they'd get ignored. At worst they'd be told they'd have to register each place as a hotel, set up inspections, get necessary permits, and generally slit their own throats.
So strategically, the thing to do is to just ignore the laws, find sufficient technicalities and fig leafs to rebuff government on their first approach, and start the service. If it goes nowhere, then no harm is done. And if, as with Airbnb, it takes off, they're in a much better negotiating position.
Now everybody knows what the service is, and it's easy to see that different laws and regulations will be needed. And regulators can't kill the market off without making a lot of people mad. And the city will end up happy: more capacity to absorb large tourist flows, better experiences for the kinds of visitors that would rather stay in a home than a hotel, more money in the pockets of local citizens. And, of course, soon there will be more tax revenue, too.
I know that there is language in the AirBnB terms that mandate the owner take care of compliance. I wonder what proportion of homeowners that rent through AirBnB (or similar sites like VBRO) are doing so in full compliance with all of the above.
A few years? This seems like confirmation that it's happening now.
I thought it'd lower the barrier of entry.
I really hope that's a joke. Why should they be exempt from the law, exactly?
[A hotel is:] A building or part of a building in which, living or sleeping accommodations are used primarily for transient occupancy, and my be rented on a daily basis; one of more common entrances serve all such living or sleeping units; and; twenty-four hour desk service is provided, in addition to one or more of the following services: housekeeping, telephone or bellhop service, or the furnishing or laundering of linens.
If the local hotel laws don't apply to AirBnB in a particular locality, then great! But that doesn't excuse them from finding out, or from conforming to laws in other places that do regulate them.
You mean like hotel companies that research hotel laws and taxes in every country they operate in?
Just because you are Internet Business you are entitled to not figure out tax laws? Airbnb is Billion Dollar company (Valuation wise) and saying they don't need understand laws of country they operate in insane.
Well, considering it's their buisness, isn't it a necessary burden?
That's just like saying a hardware manufacturer shouldnt have to research local wireless compliance laws in each country they enter because it's 'too hard'.
You cannot say this about AirBnB.
Let's take an imaginary trip to New York City..
Fly on an airplane to LGA -- pay Federal Taxes on the ticket approaching 50%. Pay a TSA "fee," pay an "Airport Use Fee," Pay a car rental tax of often 20% on top of the state and local sales taxes. Plus a parking tax of over 19%. If you take a taxi instead, the city charges a $0.50 tax on any trip within NYC, plus sales tax is automatically contained within the fare itself. Plus the driver gets to pay city taxes on the income from that fare as well and gasoline taxes on the fuel used as well as the insanely expensive cost of the taxi medallion itself. We're not even at the hotel yet. Perhaps you find a cheaper ticket flying into Newark? Cool, pay a Port Authority $13 toll just for using the Holland tunnel, though you do get to save on the $0.50 city taxi surcharge.
Once you're at the hotel, however you get there you get to pay the following: New York State Sales Tax, New York City Sales Tax, and New York State Hotel Unit Fee $1.50 per unit per day.
I haven't even had a chance to buy a slice of pizza yet and already I've paid some entity or another a significant amount of money in taxes. That means that the my travel budget of x dollars is now reduced by y dollars, which means that is y dollars less that I have to spend on actually increasing economic activity within the city. Which means that the businesses I would have purchased from have y dollars in fewer sales which means that they will pay both less in sales taxes, but also less in personal and business income taxes. And since I'm getting less value from my total travel budget, the likelihood that I'll travel to NYC any more than necessary is far diminished, thus leading to a overall net loss for the city.
If you notice, anytime there is anything innovative (Airbnb, Uber, etc) within a city, they always are angling for a way to tax it. Perhaps if those lunatics in city government (especially NYC and San Fran) realize that the reason their cities are so expensive is because of the cumulative effect of all of this nickel and diming.
Want affordable housing for "normal" people in NYC? End rent control. There are people in 3 bedroom, nice apartments in Soho, paying $500 per month, and in the same exact building, market rents are $5500 per month because the landlord has to subsidize the loss on the $500 apartment.
And now NYC is crying about losing their occupancy taxes on Airbnb? As a former NYC resident I would like to cry about seeing police officer's driving $90,000 cars off-duty and using their "Police Official Business" placards to avoid paying parking fees. When I worked at General Assembly, I would see high-end Jaguars and Cadillacs parked in front of our building on 23rd street with police placards. While our unemployed students would have to go downstairs every few hours to stuff yet more money into the meter.
NYC and San Francisco -- you can go suck an egg when it comes to collecting an occupancy tax for Airbnb.
While taxes suck, property should not be exempt from it otherwise we'll have much further unfair taxation system.
If you can answer no to every question, is the same also true for all of your paying customers?
Look, all of this is ridiculous. I'm all for taxing business, but honestly, taxes on the house (the structure itself, the materials) have been long paid, and property taxes are being paid. If anything, I'd think that this would be a zoning issue, which would be handled by municipalities. But even then, I tend to agree that unless if your neighbors are taking issue with it, then taxes/fees should be kept at an absolute minimum, if not zero.
e: on top of that, the money which he used to buy his house (with tax) as well as pay the annual property tax is ITSELF taxed by income tax. How many levels of taxing are appropriate? Honestly.
Yes, sure, absolutely, we already do. It's a percentage of what you earned writing said OSS. I sometimes get paid by clients to write code that later gets open sourced and yes, sure, I pay regular income tax on that. If you didn't earn any money, well then the government cut is zero USD, just as it is when you give your room away for free to strangers.
> It's your property, what business is it of the government's?
You could argue that renting an apartment puts a burden on the community - the people that rent it need to drive there, they use public roads and public resources. However, that argument is false. The argument behind taxes is that there is a government that allocates certain resources towards community goals - security, infrastructure, welfare. These resources need to be paid for and so the government raises taxes - on income, on property, on cars etc. All the money collected gets redistributed and none of it is tied to the sector it came from: My income tax pays for roads, railways, kindergardens alike even though I don't own a car and rarely drive and don't have any kids. And the legislative decided that renting a room is a taxable action and that's it - like it or not. It's really as simple as that.
I am not a lawyer, but I believe that lawyers spend lots of time discussing who has "an interest" in whatever issue. In any given case there can be multiple competing "rights" and "interests." Your property rights are only one among those. Property rights do not trump all other rights and interests. (I'm sure I'm not using the precise terminology, but you get the idea.)
Here's one link: http://legal-dictionary.thefreedictionary.com/Balancing+of+C...
You also fail to acknowledge that a large majority of the spending you've described could be privately run. I'm not suggesting that it should be, however, it's possible some of it could be. If I went to a private school supported by no government money, does that mean I ought to pay taxes to that private school if I happen to become a billionaire? After all, if it weren't for that school, I wouldn't have the education to have built something that made me a billionaire.
Well that's bullshit. I pay a gas tax to drive on the road. I pay a telephone excise tax as well as state and local taxes. I also pay sales tax. I pay property tax, I pay school taxes. I pay taxes on buying and registering a car, I pay taxes when I sell and transfer the title to a car. I pay parking taxes, airport taxes, airline taxes.
I don't owe government a "debt" because of my success any more than government owes me anything because of my failure.
I didn't say you owe the government for every accomplishment. But perhaps I have a different perspective, which is hard to convey over a message board, from having traveled and lived in several countries where the government does not enable the infrastructure (legal, financial, etc.) for businesses to thrive that we enjoy in the US.
Unless you believe that Americans are genetically superior Übermensch, you have to give some credit to "the system" for making the success of this economy, relative to most of the world, possible. And your taxes, to the extent that they are wisely spent, support that system and ensure its survival.
This is my property which I bought with no help from the government. No subsidies, no discounts, nothing. But why do they want my money again? This is double taxation, dude.