Bill to Regulate Home-Sharing Heads to Governor's Desk
Michael Booth, New Jersey Law Journal
June 20, 2017 | 3 Comments
The New Jersey Senate on Monday gave final legislative approval to a bill that would impose taxes on the burgeoning home-sharing industry.
In a 25-13 party-line vote, the Senate approved A-4587, which would impose state sales and occupancy taxes on the operators of home-sharing facilities, as well as other taxes, depending on the particular municipality.
The move is part of an effort to regulate an industry dominated by San Francisco-based Airbnb, even as some municipalities in the state move toward banning the practice within their borders. The bill passed the Assembly in May and now goes to Gov. Chris Christie, who has not yet indicated whether he supports the bill.
"Our laws need to be updated to keep up with changes brought about by new technology," said one of the sponsors, Assemblywoman Annette Quijano, D-Union, in a statement. "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."
"We can't allow rules to apply to one business but not another when they essentially provide the same service," said another sponsor, Assemblywoman Valerie Vainieri Huttle, D-Bergen. "Accommodations booked through sites like Airbnb are used like hotel rooms. They should be subject to the same obligation."
In regulating the home-sharing industry, most advances are being made by cities, not states, although New York state law bars most urban apartment owners from renting out their homes for stays of 30 days or less. The District of Columbia also has introduced legislation that would impose licensing and tax requirements on home-sharing.
During committee hearings on Feb. 27, Airbnb was the only home-sharing company that took a stance on the New Jersey bills. A representative told the committee that Airbnb supported A-4587, but objected to a second bill, which he described as being too restrictive. That bill, A-4441, would allow local governments to mandate that homeowners who want to rent out all or part of their homes via home-sharing platforms register with the municipality, pay a fee, and ensure their homes are up to code and properly maintained. Homeowners would face fines of up to $100 a day for failure to comply. The bill also would allow towns to effectively bar home-sharing by setting a minimum 30-day rental agreement.
That bill is still awaiting a full vote.
In New Jersey, about 17 towns, mostly those closer to New York, have chosen to bar home-sharing, including Palisades Park, Englewood Cliffs, Fort Lee, Lyndhurt and Glen Rock.
Airbnb had 260,000 rentals in New Jersey last year alone, according to committee testimony.
Jersey City and Newark already have reached agreements with Airbnb to collect 6 percent fees. Other towns—primarily those in Atlantic and Cape May counties and around the northern New Jersey Meadowlands—are permitted to charge additional taxes and fees. Quijano said those taxes can amount to up to 18 percent of a rental charge.
Two major stakeholders in the rental industry—the New Jersey Hotel and Lodging Association and the New Jersey Restaurant and Hospitality Association—support the two-bill legislative package.
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