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Airbnb tax collection bill vetoed by Hawaii's governor

Short-term residential rentals are seen by most state and local lawmakers as a great tax revenue source, but not in the United States' island paradise.

Turtle Bay Resort North Shore Oahu Hawaii_Darren Thompson via Flickr CCRather than stay at a resort like Turtle Bay on the North Shore of Oahu, some visitors to Hawaii prefer untaxed home share rentals available through Airbnb and other online accommodations brokers. (Photo by Darren Thompson via Flickr CC)

Hawaii Gov. David Ige this week vetoed a bill that would have made collection of taxes on Airbnb rentals easier.

The veto puts the 50th U.S. state, arguably one of the world's most visited spots, in the strange position of apparently being the lone Airbnb locale to reject the company's collection of state and local taxes on short-term rentals.

Officials in those other jurisdictions -- around 200 worldwide -- welcome efforts by the online lodgings broker to collect state and local taxes on behalf of residents who rent out their houses and rooms.

Short-term vs. permanent housing needs: It's not that Ige is opposed to Hawaii getting more tourism-related revenue on the short-term residential accommodations.

"I do understand the Airbnb model has been very successful, and we need additional vacation rentals to support millions of visitors that are coming to our islands," the Democratic governor told the Associated Press.

But Ige said he was more worried about the possibility the bill, which the Hawaiian legislature and Airbnb supported, would "facilitate illegal rentals."

Homelessness complications: The governor also expressed concern about the impact the measure might have on his state's growing homeless population.

Hawaii, like many desirable locations, is facing housing affordability issues. That's led to the state having the nation's highest rate of homelessness per capita.

"We do know that having properties or accommodations available to residents is part of the long term solution to homelessness, and I personally would rather have rental units available to residents rather than to visitors," Ige told the AP.

Official reasons for veto: The use of an intermediary system, such as the "tax accommodations brokers" called for in the bill to serve as tax collection agents, provides a shield for owners who do not currently comply with county short-term rental laws, Ige wrote in his veto statement.

"This could have also encouraged owner-occupants to choose 'transient accommodation renters' at a time when affordable rental housing in our state is severely stressed and homelessness remains a critical concern statewide," he added.

Tourism advocates supported bill: In addition to Airbnb, the tax measure was backed by Hawaii's tourism industry.

Tourism officials say it is not fair for the state and local jurisdictions to collect taxes only from hotels and not from others that are in the same business. 

An Airbnb-sponsored study found that in 2015 Hawaii residents who rented their residential property to tourists made an average of $7,700 on Oahu and $4,300 on Hawaii Island. The company estimated that it could collect about $15 million annually on behalf of the people using its website to rent their houses or rooms in their homes.

Hawaiian supporters of the bill had hoped that once the state started bringing in the new tax money, counties would follow suit, as well as act on issues like illegal rentals.

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