Bill would allow vacation rental websites like Airbnb to collect state taxes

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More and more people are looking for what the tourism industry calls an embedded tourism experience.

Enter vacation rental websites like Airbnb. Tourists who use Airbnb bring in hundreds of millions of dollars to the state, according to a study paid for by the company.

The study says last year alone, those vacationers spent just over $350 million during their trips.

Hawaii residents running these vacation rentals made an average of $7,700 on Oahu, and $4,300 on Hawaii Island.

This year, lawmakers took up a proposal to change how the state gets its share of tax money.

Up until now, if you were running an Airbnb-type of vacation rental out of your house or apartment, you were responsible for paying taxes to the state.

“Some of them are paying and probably some aren’t,” said Tom Yamachika, Tax Foundation of Hawaii.

But under House Bill 1850, which is now headed to the governor, that would change by allowing companies like Airbnb to collect taxes and give them directly to the state.

The state Department of Taxation supports the bill, saying it’s had trouble in the past collecting taxes from individuals who rent out their homes using these websites.

“At the end of the day, I appreciate where the legislature’s coming from. This is $12 (million) to $15 million they don’t have, but we want to make sure once again that everyone is playing by the same rules, so this is a good first step in our opinion,” said Mufi Hannemann, president and CEO of the Hawaii Tourism and Lodging Association.

Hannemann also says there is still the issue of illegal vacation rentals that get past the county authorities, but as long as there is a level playing field, he says he welcomes the competition.

One of the study’s writers, Joseph Toy of Hospitality Advisors, says it shows that there was a need for the kind of service that Airbnb and other organizations fill.

“We have 85 percent occupancy in Waikiki. We’re at capacity so the rental market really helps alleviate some of that pressure without really building new hotels,” he said. “It’s really helped alleviate some of that demand that’s been overflowing from Waikiki.”

If the bill becomes law, Airbnb has already committed to becoming a tax collection agent.

There are still some vacation rental companies that have yet to back the bill.

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