Up to a third of Airbnb's price gap with hotels is due to tax treatment • Hacker News Board

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#111

Post by digitaltrees » Mon, Jan 02, 2017, 9:39 PM UTC

baddox wrote: post #41

digitaltrees wrote: post #29

Earlier quoted context omitted.

So are you saying we should get rid of any regulation where "customers love a service" that doesn't follow the regulation? So we should allow a contract killer for hire on-line marketplace because drug cartels would really love to book their preferred hit man from an iPhone app?

No, I think it's reasonable to look at who is benefited and harmed by a regulation. The morality of contract killing is probably not very controversial. The vast majority of people would oppose it even if no laws or government existed.

I agree, my point is that it is a balance. My example is far to the extreme. And I concede that AirBnB has a reasonable argument that the regulations should apply to them since there are real, and important factual differences in the way they operate.

That being said, as you point out, we should look at the benefit and harm of a policy, if existing business are harmed that is a relevant factor. I think it is reasonable, that has a general and universal rule, companies should operate under the same set of rules. The difficulty is that AirBnB, may not fit into existing categories of an industry and regulatory framework. So how do we determine which set of rules to apply, or whether any should? How do we determine what a company is doing that is subject to regulation?

Perhaps a good starting point is to look and the product/service and customer segment. Thus, where two companies are providing an interchangeable good/service, to the same customer segment, they seem to be direct competitors and as such, I think it is reasonable to apply the same rules or we are allowing one party to benefit from regulatory arbitrage.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#112

Post by digitaltrees » Mon, Jan 02, 2017, 9:46 PM UTC

stale2002 wrote: post #108

digitaltrees wrote: post #93

Earlier quoted context omitted.

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.

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

Cite? Seems like a very broad generalization.

I probably agree that tourists are a net benefit, but like any transaction, they receive a good (experience of visiting a city), and pay a cost (part of which is to the city and its citizens); seems fair.

That being said, not all cities like tourists. Ever tried to go to the beach in New York? They are all private, you have to be a member of a club with beach access. That definitely cuts down on day trip tourists. Some cities in Florida with beach access have added taxes and regulation to keep spring break tourists away. The cost of those tourists was too high.

http://www.washingtontimes.com/news/2015/jun/3/florida-sprin...

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#113

Post by digitaltrees » Mon, Jan 02, 2017, 9:53 PM UTC

mcguire wrote: post #87

digitaltrees wrote: post #17

Earlier quoted context omitted.

Public safety regulations are not pointless red tape. They are created after real tragedy that shows a clear need. In fact, fire regulations in NY first applied to apartments, while hotel owners fought for decades to avoid the regulation require it fire escapes (Read the following for more information http://www.uvm.edu/histpres/HPJ/AndreThesis.pdf ) Even after fire escapes were mandated hundreds of people died in a…

As to that last paragraph, some specific quotes from the article: " Airbnb has also bowed to pressure over planning concerns in residential areas, by agreeing to help enforce annual rental limits. But consumer protection is another emerging issue. David Weston, chairman of the Bed and Breakfast Association, criticises Airbnb for not ensuring compliance with fire regulations. “I think the public assumes some sort of c…

I agree that abiding by the regulations of a family home is not sufficient given how factually different the use of the property is and would also point out that this clearly enables a lower price as the hosts don't have to pass this cost along to AirBnB customers.

I would also point out that the is likely asymmetric information here, where, as you point out, consumers either don't know or assume that the fire safety standards are inline with industry norms. Regulation should definitely be designed to correct information imbalances between customer/seller.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#114

Post by digitaltrees » Mon, Jan 02, 2017, 10:01 PM UTC

wyager wrote: post #76

okreallywtf wrote: post #71

Earlier quoted context omitted.

You said in a lot less words the same thing I just finished typing. To expand on your point, I have friends who have been occupying a nearly 100 year old house for 30+ years who in the last 2 or 3 started renting it on AirBnB. I lived there while in college for a few years as well. It had live knob-and-tube wiring [1] whose asbestos sheathing had long since flaked off or were ready to flake off at the slightest touch…

> When doing renovations (prior to being an AirBnB) a lot of these issues were fixed Exactly. Any house that has not been renovated recently enough to adopt modern safety regs is unmarketable. > but had the city not forced them to add extra exit lights and fire extinguishers and smoke alarms, people would have been staying there with absolutely no idea about any of this. So you're complaint is that in a hypothetical…

> Any house...not renovated..is unmarketable.

Only because there is (i) enough modern housing stock (with safety reg compliance) to provide other options, (ii) knowledge sufficiently available for the public to know the difference, (iii) strict and consistent enforcement to over come the collective action problem.

I would welcome any evidence or analysis showing a free market would create sufficient incentive for home builders and landlords to voluntarily adopt this level/kind of fire or personal safety standards. To me the market would clearly incentive most structures be build at the lowest cost. I would gladly stand correct, I don't have enough knowledge to know what the facts would support.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#115

Post by digitaltrees » Mon, Jan 02, 2017, 10:16 PM UTC

wyager wrote: post #76

okreallywtf wrote: post #71

Earlier quoted context omitted.

You said in a lot less words the same thing I just finished typing. To expand on your point, I have friends who have been occupying a nearly 100 year old house for 30+ years who in the last 2 or 3 started renting it on AirBnB. I lived there while in college for a few years as well. It had live knob-and-tube wiring [1] whose asbestos sheathing had long since flaked off or were ready to flake off at the slightest touch…

> When doing renovations (prior to being an AirBnB) a lot of these issues were fixed Exactly. Any house that has not been renovated recently enough to adopt modern safety regs is unmarketable. > but had the city not forced them to add extra exit lights and fire extinguishers and smoke alarms, people would have been staying there with absolutely no idea about any of this. So you're complaint is that in a hypothetical…

Read mcguire's post above, the point is that residential fire codes are insufficient and less safe for a property that is being used as a bed and breakfast, and the industry group that represents bed and breakfast operators says it puts them at a cost disadvantage.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#116

Post by rayiner » Mon, Jan 02, 2017, 11:14 PM UTC

stale2002 wrote: post #108

digitaltrees wrote: post #93

Earlier quoted context omitted.

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.

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

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

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#117

Post by rayiner » Mon, Jan 02, 2017, 11:18 PM UTC

scarmig wrote: post #74

rayiner wrote: post #61

Earlier quoted context omitted.

> And customers love those services. All else being equal, customers love paying less for the same thing. But they don't necessarily like the implications at scale. E.g. would New Yorkers vote to raise property or income taxes to make up for the $1.8 billion that would be lost from hospitality taxes?

Even that's not as simple, though: if hotels all failed, they would be replaced by something else (maybe AirBnBs, maybe other things, probably a mix) that would generate economic activity and tax revenues. Certainly adding up to less than what's lost in hospitality taxes, but it does counteract the loss to an extent.

It doesn't counteract the loss, because the hotel already generated economic activity and tax revenue and then hospital taxes on top of that.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#118

Post by darpa_escapee » Mon, Jan 02, 2017, 11:36 PM UTC

stale2002 wrote: post #109

DasIch wrote: post #91

Earlier quoted context omitted.

Apple is profitable but it certainly not competitive on pricing. Monopolies also tend to be profitable, competitiveness isn't even a concern there.

???? So are Uber's prices too low, because it is being subsidized by VC money, or are the prices too high, because it is a monopoly? You can't have it both ways. My argument is that their prices are just fine where they are now, and that there is no upcoming price hike, because the prices, in the USA, are profitable NOW.

In my market, Uber undercuts the established taxi businesses.

People clearly have a higher valuation for a taxi ride than what Uber is charging because they've been paying the higher price and are still paying it when they choose another business other than Uber to ride with. Once Uber has driven out the other options, thus the need for competitive pricing, why wouldn't they capture that lost value?

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#119

Post by EdHominem » Tue, Jan 03, 2017, 2:03 AM UTC

digitaltrees wrote: post #105

EdHominem wrote: post #28

Earlier quoted context omitted.

> Which hotel regulations do you think are overly onerous and ridiculous? The many extra taxes and tariffs on guests. Occupancy taxes, tourism improvement fees, etc, that the city is only able to capture by abusing its control over the hotels. It's easy to pass laws that don't affect people who live in your area because nobody is that motivated to stop you. Hotels and other legitimate businesses suffer because the ci…

All taxes have an effect on domestic parties, even if they apply to tourists, so those domestic parties will be the ones fighting against. I think national hotel chains are capable of advocating their interest, as is AirBnB. I don't think I have ever seen an example of someone imposing a tax "just because they can". Indeed, there are very real limits, at all levels of government, to the power to levy any tax. While t…

> I think national hotel chains are capable of advocating their interest,

It's not hotels the tax hurts, so I don't think they would have advocated very hard. In fact, to the degree that tax pays for anything related (inspections, etc) they would support it as it would externalize their costs.

> I don't think I have ever seen an example of someone imposing a tax "just because they can".

Of course not, but because it reflects positively on them and yet doesn't impact the pocketbooks of their constituents. Which amounts to "because they can."

> If your state or local community doesn't limit taxing authority

Copyright is limited - to any finite duration. So yeah, there are limits. Our goal as a society shouldn't be to tax everything to the limit though, but to cover externalities to avoid burdening others.

In this case the people presumably using the resources (the tourists) are being taxed, but only indirectly on their hotel stay. This unfairly doubly-impacts a local who needs a room and it ignores the usage costs of those tourists who don't stay in a hotel, or rather saddles the hotel using tourist with the RV-tourist's share.

The fact that the tax badly fits the supposed problem is an indication that it's just a cash grab with any justification tacked on.

> then be part of the change you want and pursue a limit.

The "you're in a democracy so it's all your fault" answer. Fwiw, the first step of change is identifying and discussing the issue.

I'm not saying the answer isn't to change broken governments, but first you need to realize that the system exists to produce this state. We didn't end up here by accident and to fix it will require a reasonable alignment of incentives.

Re: Up to a third of Airbnb's price gap with hotels is due to tax treatment

#120

Post by EdHominem » Tue, Jan 03, 2017, 2:16 AM UTC

JohnTHaller wrote: post #104

EdHominem wrote: post #56

Earlier quoted context omitted.

> Hotel taxes support infrastructure and city services. So restaurants that don't charge the extra foreigner-tax are destroying the city infrastructure? Or are their regular taxes expected to cover it? Why not with hotels? Why can't they simply be assessed the real cost of supporting their usage? If there was a cost associated with hosting an out-of-town guest, why is it a percentage of the room rate? Of course, the…

Hotel taxes go to support things like inspections that ensure things like exit signs, fire extinguishers, smoke detectors, CO detectors, secondary exits, etc are all up to code on a regular basis.

Which should be paid for by the hotels and reflected in the room rates, not hidden in tax.

I'm also sure it doesn't cost $45 per room night to inspect a hotel room in SF, so the tax is out of proportion. Which is expected because the people it impacts don't have representation to change it.

And to the degree they can avoid it, it is only by the broad brush of avoiding the city entirely which has negative effects on merchants in business which don't unload their costs onto others.