New Jersey rarely leaves ordinary and easily gotten tax revenue on the table. It’s strange that it let providers of short-term accommodations skip paying sales and occupancy taxes for so long — as long as the stays were arranged online through a service such as Airbnb.
Nearly all other states have been charging these kinds of occupancy taxes to those renting rooms online for a while, including neighboring Pennsylvania and New York. Florida has been collecting them since 2015.
New Jersey got around to ending the tax break as part of its budget agreement at the end of June, and people and businesses that rent their properties through online platforms had to start charging the taxes last week.
The new law is expected to add 12 percent to 15 percent to the cost of Airbnb-style transient accommodations, which the hotel and motel industry has been paying for decades. State sales tax is 6.625 percent, while the state occupancy fee is 5 percent.
We’re reluctant to support new or higher taxes in already over-taxed New Jersey. But as we’ve said before, this was a matter of fairness, principle and the health of the hospitality industry.
It simply isn’t fair to subject one set of providers to a set of taxes, fees and regulations while giving others who provide the same service a complete pass. It also would undermine the hospitality industry to give preferential treatment to one segment of it.
The favoritism shown by state officials also seemed like they were picking winners, rather than letting accommodation providers compete equally in the open marketplace.
Two local state senators — Republican Chris Brown of Atlantic and Democrat Jeff Van Drew of Cape May, Cumberland and Atlantic counties — cited helping the shore tourism market as their reason for voting against taxing Airbnb and other online renters the same as all other accommodation providers. Brown said “Airbnb is growing the market” and Van Drew said it was a way to make “our tourism more productive and more competitive.”
Assemblymen Vince Mazzeo and John Armato, both Atlantic Democrats, got it right in voting for the tax. They like Airbnb and other short-term rental services too and are glad to see them thrive. But the other 46 states that don’t exempt online rental services from occupancy taxes convinced them equal treatment was best for all concerned.
It’s not as if Airbnb is some fragile startup that needs government favors.
In Atlantic, Cape May and Ocean counties alone this past summer, Airbnb hosts made $30.6 million — nearly double from the same period the year before. The number of renters surged from 83,000 last summer to 140,000 this summer.
Also, the online accommodation services are subject now to municipal taxes and fees that hotels and motels have long paid.
But as Linwood showed recently, cities and towns can also decide that they don’t want transient stays in their residential neighborhoods.
Last month, Linwood banned Airbnb-style short-term rentals — less than 30 days — after complaints about residences with people frequently staying for just a few days or a weekend.
Linwood’s residential zoning already prohibited the operation of businesses, but the city said it wanted to make it clearer and assign penalties for violations. Dozens of other New Jersey municipalities have done likewise.
Adhering to local zoning and applying taxation and regulation equitably seems like common sense. All it took was another desperate search for revenue for New Jersey to realize that.