Perhaps lost in the shuffle of the weekend discussion involving both the millionaire’s tax and the corporate business tax was the passing of another bill that figures to bring substantial revenue to the state: a so-called “Airbnb bill.”
The legislation, sponsored by Assemblywomen Annette Quijano (D-Elizabeth) and Valerie Vainieri Huttle (D-Englewood) and Assemblymen Raj Mukherji (D-Jersey City) and Tom Giblin (D-Clifton), is an attempt to ensure fairness among all hospitality providers in New Jersey by imposing the same taxes and fees that hotels and motels currently must pay to the state on “transient accommodations,” or residences used as temporary lodging.
In other words, Airbnb — and organizations like it — will now have to pay taxes on all occasions when a fee is collected for an overnight stay.
“Our laws need to be updated to keep up with changes brought about by new technology,” Quijano said. “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 bill, which was passed by both the Assembly and the Senate, has been sent to Gov. Phil Murphy, who is expected to sign it into law.
Josh Meltzer, head of Northeast public policy for Airbnb, said he’s glad the bill was passed. In fact, Meltzer said Airbnb has been pushing for legislation for years in an effort to simplify and streamline the process.
“Airbnb has fought for years to ensure that the short-term rental community can contribute tax revenue to support public services throughout New Jersey,” Meltzer said.
“We appreciate the work of the legislative leadership — including bill sponsors Sen. Pat Diegnan and Assemblywoman Annette Quijano and Senate Budget Committee Chair Paul Sarlo — and the governor on this issue and look forward to working with the Treasury to ensure that all platforms collect and remit state and local taxes consistent with federal law.”
Vainieri Huttle and Mukherji said the bill will go a long way to ensure economic fairness.
“We can’t allow rules to apply to one business but not another when they essentially provide the same service,” Vainieri Huttle said. “Accommodations booked through sites like Airbnb are used like hotel rooms. They should be subject to the same obligation.”
“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,” he said. “Rather than penalizing the choice to stay in a hotel or motel, the state should ensure that everyone pays the same taxes for lodging.”
Under current law, the state imposes the sales and use tax and the hotel and motel occupancy fee on the rent for each occupancy of a room or rooms in a hotel. Further, current law authorizes municipalities to impose various taxes and fees on the rent for each occupancy of a room or rooms in a hotel in those municipalities. However, there is no tax or fee imposed on short-term rentals.
The bill would impose the state sales and use taxes, and the hotel and motel occupancy fee on these rentals and authorize municipalities to impose the following taxes and fees where applicable: the hotel occupancy fee, the Atlantic City luxury tax, the Atlantic City promotion fee, the Cape May County tourism sales tax, the Cape May County tourism assessment, the municipal occupancy tax, the sports and entertainment facility tax and the Meadowlands regional hotel use assessment.
Accommodations listed with a real estate agent or real estate broker licensed by the New Jersey Real Estate Commission would be exempt.
Under the bill, permanent residential rentals would continue to be exempt from the taxes and fees listed above. The bill also would exempt charitable, nonprofit organizations from collecting the taxes and fees when providing transient accommodations in furtherance of the nonprofit’s mission.
Giblin said the bill is an example of the state adjusting to a changing economy.
“New Jersey welcomes innovative business models like Airbnb’s, provided these emerging businesses play by the same rules as their competitors in the market,” he said. “By setting clear parameters regarding taxation on short-term rentals, the state can ensure that everyone in the hospitality industry has a fair shot.”
Read more from ROI-NJ:
- Airbnb applauds Murphy’s desire to tax sharing economy
- After another day of negotiations, Legislature formally passes modified budget deal