
Up to a third of Airbnb's price gap with hotels is due to tax treatment - szx
https://www.ft.com/content/73102c20-c60e-11e6-9043-7e34c07b46ef
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franciscop
This is the relevant quote, and not that clickbait title:

> The VAT on most Airbnb stays can be as little as 0.6 per cent because the UK
> only levies the tax when businesses sell more than £83,000 per year — a
> threshold reached by very few Airbnb hosts. It is otherwise only payable on
> Airbnb’s booking and service fees.

So the problem is that many "small business" pay less taxes than big
companies, which seems fair. The main difference is that thanks to Internet,
those small business now can be aggregated into a platform while still
operating independently, which is basically awesome.

~~~
digitaltrees
Yes, and AirBnB could be charged for the difference in tax. This would
preserve the advantage for small business and treat them the same as a large
hotel chain.

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jdavis703
Hotels are heavily taxed because tourists and business travellers can't vote.
In many cases cities like London and NYC are non-fungible goods, so if you
want to go there you just have to pay the taxes. If they ever get high enough
that hotels can't book rooms, the businesses should lobby the government to
lower them.

~~~
logicallee
could you add in your analysis of airbnb or how it relates to what you've
written - you've left it entirely out of your paragraph and I can't draw an
immediate conclusion.

(Though maybe you were adding information about hotel taxation without any
thoughts about airbnb or how it relates.)

~~~
stale2002
It is related to AirBnB because there is an argument that the tax is unfair to
consumers to begin with.

It is designed to screw over foreigners.

~~~
rayiner
Visitors use a ton of resources--they should pay for them. E.g. think about
all the money that goes into security for Times Square.

~~~
jeffdavis
Most cities seem to love tourism, to the point that it's considered an
industry and has its own advertising.

Tourists pay sales tax and indirectly pay other taxes through businesses that
cater to tourists.

~~~
digitaltrees
You cant set sales tax at different rates for tourists, so you have to make up
for this difference elsewhere if it is determined the sales tax contribution
from tourism does not fully compensate for the costs.

~~~
stale2002
The tourists are a net benefit for cities. If anything, they should pay LESS
taxes, not more.

~~~
rayiner
Almost everyone is a net benefit for cities. That doesn't mean they should
escape taxes.

~~~
jeffdavis
"Escape taxes" is a bit harsh. If the tourists are a net benefit, who cares if
it's perfectly fair or not?

If you are really concerned about this inequity, you need to also consider the
services that tourists don't use, such as schools, and most of the roads
outside of tourist-trap areas.

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ceejayoz
This is a bit of a deceptive headline. The immediate sub-headline is "Up to
third of price gap with hotels is due to tax treatment, FT finds", which is a
pretty massive difference.

(Side note: Usual "Google the headline" trick works on FT.com's paywall)

~~~
jessriedel
Also, the much higher VAT rate paid by most hotels in the UK compared to most
AirBnBs (17% vs 0.6%) is not because AirBnBs are illegally avoiding the tax,
but simply because most hotels, but few AirBnBs, cross the business-size
threshold where the higher VAT kicks in.

~~~
justincormack
its not a "higher VAT" threshold, you do not have to register for or charge
VAT at all if your business earns less than £85,000 (you might want to if you
pay out a lot of VAT though). This is unusual in the EU, most countries do not
have this exemption I don't think.

~~~
nathanvanfleet
Canada has the same thing. You have to collect more than 30,000$ in income
before you need to collect taxes for it.

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jlg23
"around a third of the $100 saving you make over the price of an average hotel
room"

Up to 30USD of the 100USD I _save_ compared to a regular hotel? PER NIGHT? In
that price range, $30 are a mere tip.

~~~
steveklabnik
Yes, in a London hotel in 2015:

> On average, guests paid $220 a night for a hotel room in 2015 before VAT,
> while Airbnb hosts received $142, according to the Hotelschool report, which
> was calculated in dollars. After taking account of hotel room VAT and Airbnb
> fees (assuming a 10 per cent guest fee and a 3 per cent host fee, plus VAT)
> the prices were $264 for the hotel room and $164 for Airbnb.

------
darpa_escapee
It's almost as if AirBnB, Uber et al get by on skirting the law other people
have to follow.

~~~
wyager
"Skirting the law" is loaded language that makes it sound as though they are
doing something illegal. They are not.

It's true, though; the reason companies like AirBnB and Uber are so vastly
superior to the entrenched competition is that they don't have to deal with
all the ridiculous and pointless red tape that makes taxis so horrendous and
American hotels so insanely expensive.

I'm not sure how anyone can recognize that overregulation makes taxis, hotels,
etc. so truly awful and then turn around and suggest that the solution is to
_also_ overregulate everyone else who managed to escape from that utility-
sucking tarpit of bureaucracy and waste.

~~~
mdorazio
Which hotel regulations do you think are overly onerous and ridiculous? Most
of those regulations were put in place to protect communities and customers,
not the hotels themselves. Zoning laws prevent tourists from overrunning
resident communities where people don't want them. Safety and health
regulations ensure that customers won't get injured or sick during their stay.
Taxes help cities pay for all the improvements, services, etc. that residents
want.

And yes, Airbnb is skirting the law in the loaded sense of the term. They
basically encourage illegal rentals and then refuse to police them until
cities like NYC force them to. They might not be directly in violation of laws
themselves, but they're definitely knowingly enabling their customers to do
illegal things.

~~~
wyager
> Most of those regulations were put in place to protect communities and
> customers

I don't have much of an issue with communities using zoning rules to prevent
AirBnBing. That's a separate issue from top-down hotel regulations.

The cost of "protecting" me from hotels is several orders of magnitude higher
than the value I get from these "protections". Of course, most of the cost of
hotel regulation is hotel taxes (which are big revenue sources for tourist
destinations and have nothing to do with hotel safety) and bureaucracy. The
claim that all regulations have something to do with safety is popular among
proponents of a given regulation, but of course it's manifestly false.

> Safety and health regulations ensure that customers won't get injured or
> sick during their stay.

I think you're putting a bit too much stock in the effectiveness of
regulation; in particular, municipal health authorities taking your money does
not make you immune from disease. I'm also quite capable of looking at
something and telling if it's dirty, which is the process I use both for my
own household and for AirBnBs. It seems to work quite well (and
inexpensively).

~~~
ec109685
It would be helpful to cite some of the things you are arguing. What basis do
you base your opinion that hotel protections are several orders of magnitude
than the value?

~~~
wyager
Out of curiosity, what do you expect me to do here? Would you like me to
research your regional tax code and break down exactly why hotels are more
expensive? Have you ever stayed in a hotel? They'll usually at least break out
the obvious things like occupancy taxes.

~~~
ec109685
Just an example of your choice to show the multiple orders of magnitude that
the regulation costs over your perceived value.

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stale2002
.... So, ONLY a third? That leaves two thirds left, thats not due to that.
That is still a big difference.

~~~
nathannecro
Hotels have to comply with other regulatory mandates like health insurance for
the workers, worker's comp, pension/retirement plans, in some cities - unions,
etc.

You may also be forgetting the other amenities that hotels may provide: the
additional cost of common area facilities (exercise rooms, breakfast areas,
pool, etc) the hotel provides for the guest. Room service, turndown service,
and daily cleaning also play a huge role.

There's also a huge amount of space that's used for things like lobbies, front
desks, back of the house offices for the accounting/managerial/etc staff that
keep not only your one room operating, but provides the flexibility to rent
100, 200, 300, 400 rooms.

Then of course, you have the construction + regulation that goes into a hotel.
Guestroom entry doors must meet a specific fire-rated standard (greater than
those normally found in residential homes). In the United States and in
Europe, each guestroom is designed to maximize the protection of the occupant
from environmental threats. Fire alarms and sprinklers are regularly tested,
every entry door has a lock whose key is tightly controlled. HVAC systems are
constantly maintained so that dust and mold don't build up inside.

And so on, and so forth.

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mcguire
" _Airbnb did not comment directly on the FT’s calculations, saying that tax
was proportionate to the level of activity provided, not the platform on which
accommodation is listed. It suggested it was misleading to compare someone
occasionally sharing a spare room with a 200-room hotel with high occupancy
rates._ "

Is AirBnB still pushing the "spare room" thing?

