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Baltimore considers hotel tax on Airbnb

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Posted at 3:15 PM, Oct 06, 2016
and last updated 2016-10-06 15:15:14-04

Baltimore City's hotel tax could soon raise the rates of local Airbnb rentals.

A new bill being considered by the Baltimore Judiciary and Legislative Investigations Committee would apply the city's 9.5 percent hotel tax to short-term rental properties in order to raise revenue and collect information.

"This isn't an effort to regulate Airbnb. It's a way to raise revenue and create a more level laying ground as far as charges," said Councilwoman Mary Pat Clarke, vice chair of the committee.

"The bill would provide revenue to the city to support public services," she said. "We'd have a better idea of the number of establishments operating, where people are staying and what's attracting people to Baltimore."

The number of Airbnb listings in Baltimore has grown substantially in the past three years, from 323 listings in 2014 to 1,182 in 2016. As of August 2016, 747 active hosts in the Baltimore area accounted for the 1,182 rental units available. The average daily rate is $137 per unit. 

The Bureau of the Budget and Management estimates that Aibnb sales in the Baltimore area generated around $3 million in revenue over the past year - equating to roughly $300,000 in foregone hotel tax. That estimate does not include hotel tax revenue that could be generated from other hosting intermediaries such as HomeAway and VRBO.

Of the hotel taxes collected citywide, 40 percent of those funds go toward Visit Baltimore - a program that promotes tourism in the area. According to Clarke, the other 60 percent goes into the city's general fund.

The tax could cause short-term rental property owners to either raise their prices to cover the cost, or lower their nightly rate in order to offer rates comparable to their current listings. 

Clarke presumes that owners would collect the tax themselves to later hand over to the city. In some locations - like Amsterdam, Portland and San Francisco - Airbnb automatically collects occupancy tax from guests and sends it to the tax authority on hosts’ behalf. 

In a letter to the council concerning the bill, Bureau of the Budget and Management Research Chief Andrew Kleine addressed the topic of regulation.

"The proposed bill does not include a regulatory component," he said. "The neighboring jurisdiction of Montgomery County recently entered into a memorandum of understanding (MOU) with Airbnb in order to begin collecting the hotel tax from active hosts.

"As part of this MOU, Airbnb is not required to provide Montgomery County with identifying information about hosts, significantly impeding the County's regulation and auditing efforts. Finance cautions the City against entering into a similar agreement with Airbnb."

The bureau views Airbnb rentals as similar to traditional hotels. Kleine recommends the city pursue regulation to promote transparency and an equal application of the hotel tax.

Clarke expressed a desire for the city to establish a working relationship with Airbnb.

A vote on the bill is expected during the next committee meeting on Tuesday, Oct .11 at 10:20 a.m. If the bill passes the committee and council votes, it will go into effect 30 days after being signed into law by the mayor.

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