By Jimmy Vielkind
People booking vacation rentals in New York on sites like Airbnb
Inc. could soon start paying sales taxes that home-sharing
companies would collect under a proposal included in Gov. Andrew
Cuomo's $193 billion budget.
Aides to the Democratic governor say the proposal could generate
an additional $10 million for the state in the fiscal year that
starts April 1, and $18 million in subsequent years. Roughly the
same amount of money would also flow to local governments around
the state, which also levy their own surcharges on top of the
state's 4% sales tax.
The proposal was embraced by the group representing the state's
county governments, but it could revive a broader debate about how
home-sharing companies are regulated in the state, lawmakers said,
which is fueled by different concerns in different parts of the
"I think it's now opportune for us to have this larger
conversation," said state Sen. James Skoufis, a Democrat from
Orange County, who favors changing state law to allow for
short-term rentals in multifamily buildings.
Mr. Cuomo's proposal doesn't address registration or change the
state's multiple-dwelling law, which prevents someone from renting
an apartment in a building with three or more units for fewer than
30 days unless the apartment's tenant is also present.
Freeman Klopott, a spokesman for the state Budget Division, said
vacation rentals have always been subject to local taxes but there
hasn't been an easy way to collect them. He said Mr. Cuomo's
proposal "fixes the problem" by having the online platform -- like
Airbnb or Expedia Group Inc.'s Vrbo -- collect taxes instead of
Airbnb began collecting certain taxes in some jurisdictions in
2014, and says it has remitted $2.6 billion to governments around
the world from inception to September of last year. But its
practices vary across states: The company collects state sales and
occupancy taxes in Tennessee and New Jersey, for example. But it
only remits occupancy taxes to some counties in other states like
New York and Ohio.
Vrbo representatives didn't respond to a request for comment.
Alex Dagg, the Northeast policy director for Airbnb, welcomed Mr.
Cuomo's proposal and said the company has supported New York
legislation with tax collection provisions since 2016.
"We're pleased the state has recognized the important role
short-term rentals can play in New York's recovery and are hopeful
that 2021 will be the year New York joins dozens of other states in
passing sensible short-term rental rules that protect economic
opportunity and drive tourism forward," she said in a
Airbnb has voluntary agreements with 34 of New York's 62
counties, including Westchester, but not New York City or the
counties on Long Island. A Westchester County spokeswoman said the
county receives around $20,000 a month under its agreement with
Airbnb. A company spokesman said it distributed $3.3 million to New
York counties in 2019.
One of the biggest beneficiaries was Essex County, which is
sparsely populated but includes tourist draws like Lake Placid and
the High Peaks of the Adirondack Mountains. The county had a 3%
occupancy tax in 2019, and collected roughly $690,000, according to
James McKenna, president of the Lake Placid-based Regional Office
of Sustainable Tourism.
Essex County has a 4% sales tax, and Mr. McKenna estimated Mr.
Cuomo's proposal could bring in $1 million of additional
There are roughly 500 properties being rented online in and
around Lake Placid, said Craig Randall, the village mayor. It
adopted a law last year that set occupancy limits on vacation
rentals and required owners to register their properties.
Mr. Randall also operated a small motel for more than 40 years,
and said he supported the governor's proposal on the grounds of
"Many of the people who do this refer to it as their little
business," he said.
It is a different story in New York City, where many elected
officials have expressed concern that short-term rentals of
apartments, including rent-stabilized units, can create upward
pressure on rents.
Both hotel owners and the union representing hotel workers have
pushed for laws that would require Airbnb to share listing data
with officials, and to levy fines against people who violate the
Vijay Dandapani, president and chief executive of the Hotel
Association of New York City, which represents hundreds of
hoteliers, said his organization didn't object to Mr. Cuomo's
proposal because it didn't make any changes to the
In addition to sales tax, the governor's budget language would
let New York City collect a $1.50-per-room nightly surcharge on
hotel stays. Representatives for Mayor Bill de Blasio, a Democrat,
said he would review the proposal and his priority would be on
preventing illegal short-term rentals.
City Hall representatives also said Mr. Cuomo could raise more
funds by increasing taxes on the wealthy as he grapples with a
$10.2 billion deficit in the coming fiscal year. The governor has
proposed a $1.5 billion income-tax increase on people reporting
more than $5 million of income.
State Assemblywoman Linda Rosenthal, a Democrat from Manhattan's
Upper West Side, has sponsored previous laws cracking down on
home-sharing applications and said she was leery of giving any
official blessing of their operations -- even if it meant $10
million of additional revenue.
"Perhaps outside of the city it makes more sense, where vacation
rentals are less likely to be illegal," she said.
Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com
(END) Dow Jones Newswires
January 25, 2021 08:16 ET (13:16 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.