Airbnb’s Brian Chesky blinks, finally talks taxes
A tax on Airbnb’s house
Chesky acknowledged for the first time that Airbnb hosts ought to pay some tax. He mooted the idea of hosts paying New York City’s occupancy tax, which is $2 per day plus 5.875% of the rent for rooms that cost more than $40 a day.
Some interesting implications include, whether, if Airbnb charges a 10% service fee, it will charge the roughly 6% tax inclusive of sale value.
If hotels are on the hook to collect and pay taxes to the city, why wouldn’t Airbnb hosts be, too? Chesky’s statement didn’t delve into those issues, which are negotiating points in New York’s political offices.
After claiming that only 13% of hosts live in the Midtown Manhattan hotel district, Chesky ends with these statements:
On behalf of our New York City community, we want to work for sensible laws that allow New Yorkers to share their space, earn extra income, and pursue their American Dream. And we want to work with New York to pass laws that meet three fundamental principles:
We believe regular people renting out their own homes should be able to do so, and we need a new law that makes this clear.
Our hosts are not hotels, but we believe that it makes sense for our community to pay occupancy tax, with limited exemptions for those who earn under certain thresholds. We would like to assist New York City in streamlining this process so that it is not onerous.
We are eager to work with New York to remove bad actors in our community that are causing a disturbance to their neighbors, and will create a 24/7 Neighbor Hotline where we will service the complaints. [Emphasis added]
It’s an interesting overture to city regulators, as well as invitation to potential customers who have been afraid to use Airbnb because of scare stories about its illegality.
Airbnb has previously said that it sees New York City as “a model” of legislation for other cities in the US and worldwide.
On the one hand, if New York City adopts peer-to-peer friendly regulation close to Airbnb’s terms, that could help cement its lead (and indirectly, well-funded rival Homeaway‘s lead) in the market.
The reason: It may be even more technically difficult for upstart competitors to participate if they’re not collecting an occupancy tax. It also opens Craigslist listings up to questioning.
Other cities will likely copy the legislation, which may reduce it’s legal bills.
On the other hand, it’s a tall order to see that as a precedent for global change — though Chesky points out that Seoul, Amsterdam and Hamburg have rewritten their regulations to be friendlier to peer-to-peer home rentals.
His startup reiterates that it is continuing its work “to clarify the law” in New York.