Short-term rental sites, like Airbnb, will pay NJ’s sales, hotel taxes

BY Christopher Lang, Correspondent, @topherlang2 | MonroeNow | Jul 4, 2018

TRENTON – After years of negotiations, short-term rental websites, such as Airbnb, will have to collect sales and hotel occupancy taxes, similar to those already imposed on the hotel and motel industry.

The move is meant to level the playing field between the two hospitality service providers, and will generate millions in revenue for the state. When the bill takes effect in October, short-term rental booking websites will have to collect the state’s 6.625-percent sales tax and the 5-percent hotel occupancy fee, in addition to any fees a municipality has in place on a host.

“We can’t allow rules to apply to one business but not another when they essentially provide the same service,” said Valerie Vainieri Huttle, D-Bergen, a sponsor of the bill. “Accommodations booked through sites like Airbnb are used like hotel rooms. They should be subject to the same obligation.”

The measure received its final approval on Sunday, just after lawmakers adopted the budget to avoid a government shutdown for the second year. The potential revenues collected from the short-term rental tax were calculated into the budget.

Airbnb has maintained that it supports such taxes on its service because the funds help the state where it has hosts and help to streamline the process. Not all states where Airbnb operates have imposed taxes on the service.

“Our laws need to be updated to keep up with changes brought about by new technology,” said Assemblywoman Annette Quijano, D-Union. “The fact that taxes are not paid for stays at locations rented through sites like Airbnb but are applied to stays in hotels is an unfair advantage that hurts the hospitality industry and takes funding away from municipalities for important programs. This bill levels the playing field and provides tax fairness for the entire hospitality industry in New Jersey.”

The Office of Legislative Services suggested that the new tax revenue could generate a minimum of $6.9 million, which is based only on Airbnb hosts in New Jersey. The agency noted that it is hard to predict how much revenue would be raised in the future because hosts can charge different rates, which would impact revenues. But, Airbnb is not the only web-based short-term rental site that operates in New Jersey, it is just the most widely known and used site. The Office of Legislative Services based its calculations off of a May 2018 report from that said 8,100 hosts in New Jersey earned on average $7,300 in extra income.

The law defines a short-term rental as anything that is rented less than 90-consecuative days. It does exempt permanent residential rentals, such as an apartment unit that allows monthly leases, accommodations listed with a real estate agent or real estate broker licensed by the New Jersey Real Estate Commission and charitable and non-profit organizations that would receive a waiver from such fees.

“Online lodging marketplaces have allowed thousands of hosts in New Jersey to make extra income and have provided more short-term rental options to people from all over the country and the world who want to visit the Garden State, but the current system gives them an unfair advantage,” said Assemblyman Raj Mukherji, D-Hudson. “Rather than penalizing the choice to stay in a hotel or motel, the state should ensure that everyone pays the same taxes for lodging.”