MMA statement: Taxation of transient rentals is a matter of fairness

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For Immediate Release
For more information, contact MMA Executive Director Geoff Beckwith at (617) 426-7272, ext. 101

MMA supports room occupancy excise reform in Section 67 of the Senate Ways and Means Committee’s economic development bill (S. 2423)

The Massachusetts Municipal Association strongly supports the reform of the room occupancy excise included in Section 67 of S. 2423, the Senate Ways and Means Committee’s economic development bill scheduled for debate on Thursday.
S. 2423 would extend the room occupancy excise to include “transient” accommodations that are leisure or short-term rentals in apartments, homes, condominiums and other properties. These rentals are not included in the increasingly out-of-date definitions in the room occupancy statute that is currently referred to as the “hotel-motel” tax.
The expansion of the excise to include transient accommodations will close loopholes in the law that have narrowed the scope of the excise over the years as the economy and business practices have changed. The reforms in S. 2423 would help level the playing field for the leisure rental market and provide new revenues for the state and cities and towns. The additional revenues will help cities and towns balance local budgets and maintain municipal roads and other key parts of local economies.
Increasingly, private property is being leased as leisure and short-term rentals, a practice that has become more common with the expansion of the sharing economy and the advent of online booking companies such as Airbnb. These short-term rentals compete with local hotels and B&B companies, but are largely able to avoid the room occupancy excise due to the obsolete definitions in the law.
When a tourist rents a room in a private property, rather than at a local hotel, motel or B&B, for a single night or longer, no room occupancy excise is paid to the state or the city or town where the room is located. These private rental arrangements are rapidly increasing in number and are creating stiff competition for local tax-paying businesses. In fact, there were more than 1 million rooms available for rent internationally on Airbnb in December 2014, with analysts predicting that the number could triple by the end of this year.
The MMA applauds Senate leaders, including Sen. Michael Rodrigues, Senate Chair of the Committee on Revenue, Senate Ways and Means Chair Karen Spilka and Senate President Stanley Rosenberg, for moving forward with this important reform of the room occupancy excise law. On behalf of cities and towns across the state, we ask the full Senate to support Section 67. Closing this loophole will restore fairness to our tax system and ensure that all types of short-term rentals are treated equally.