AirBnb in Philadelphia: millions in taxes, but no one says how much

In the months leading up to the massive papal visit in the fall of 2015, rumors swirled that Philadelphia AirBnb hosts could make thousands of dollars from Catholic visitors who flock to the city to catch a glimpse of the pontiff. And the city wanted his cut.

The massive profits for AirBnb hosts haven’t exactly happened as some expected, but the city of Philadelphia still managed to get a ruler on the books in the summer of 2015, this not only legalized the use of services like AirBnb for short-term rentals, but also formalized that they are subject to the city’s 8.5% hotel tax.

Now declare Sen. Larry Farnese, D-Phila., propose a bill in Harrisburg which would similarly codify that “statewide hotel occupancy tax applies to short-term rentals through Airbnb and similar online marketplaces”. (AirBnb) already collects and remits state tax, but this movement would formalize it.)

So how much has Philly earned from taxing AirBnb rentals since July 2015? AirBnb is tight-lipped about these things – they haven’t released the numbers for Billy Penn — and it’s hard to calculate because of the way the tax is structured. But it’s safe to say that a tax on AirBnb rentals has brought in several million dollars since it was passed in July 2015. That money has been split between Visit Philadelphia, the Philadelphia Convention and Visitors Bureau, and the Convention Center itself. -same.

At the time, Philadelphia became the largest city in America to legalize AirBnb rentals (fun fact: former Mayor Nutter chairs the tech giant’s Mayor’s Advisory Council), and today the company pushed for collect taxes from dozens of jurisdictions around the world. AirBnb has worked with cities to can pay taxes – as this explains, it is often “the first step towards wider legal acceptance”.

Prior to the move, AirBnb rentals were technically illegal in Philadelphia because hotels could only operate in areas designated for them. The so-called “short-term ordinance” was passed by the city council in the summer before the papal visit and came into effect in July 2015. It authorized such short-term rentals provided that businesses and hosts meet certain conditions, including hosts obtaining a permit. if the ad is rented 90 days a year or more.

City officials say these “short-term rentals” have always been subject to the city’s 8.5% hotel tax, but 2015 legislation simply made “booking agents,” AKA AirBnb, can collect and remit these taxes on behalf of the operators. properties.

The problem: Tax payments are lumped in with the rest of what the city gets from its hotel tax, so for now we can only estimate AirBnb’s specific impact.

The city’s hotel room rental tax fund (which includes hotel room rental tax, hospitality promotion tax, and tourism and marketing tax) achieved $62.7 million at the end of fiscal 2016, the first full year the tax was formalized. This is $5.3 million more than the $57.4 million made by the fund in the previous fiscal year.

That said, there are extraneous circumstances. For example, fiscal year 2016 included the September 2015 papal visit. But when you look at hotel tax revenue on a monthly basis, revenue has increased almost every month since the tax was put in place, as you can see it in this chart that plots revenue for fiscal year 2014 through the end. for calendar year 2016:

(Note regarding the table above: Taxes are due on the 15th of each month, so taxes collected in one month were likely earned in the previous month.)

In addition, “hotel operators” also pay other taxes – including business income and receipts tax, net profits tax, and sales, use and property tax. hotel occupancy – which likely generated revenue in the city via AirBnb as well. Extrapolating the impact of AirBnb on the amount contributed by these taxes would be much more difficult.

But what we can say with certainty is: after Philadelphia formalized its tax collection relationship with AirBnb, its hotel tax collections increased by millions of dollars. And as you can see above, this trend has continued so far in fiscal year 2017.