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

ft.com

81–90 of 127 posts

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

#81
"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?

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

#82

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

There is a hotel chain in the UK that will refund you if you do not have a good night's sleep. They pay out on this promise too, I can assure you.

Hotels also have a lot of empty rooms that cost money to maintain whether they are occupied or not.

Hotels employ staff, not all of whom are fully productive 100% of the time.

Before a hotel takes my money I actually know where it is. The hotel is governed by local legislation so I have redress if something goes wrong.

I may have some redress with Airbnb but I wouldn't like to bet on it.

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

#83
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.

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

#84
post #31

Earlier quoted context omitted.

> And customers love those services. Until they die in a fire in a building that doesn't follow fire code; or are seriously injured in a possibly uninsured Uber[1] car. [1] Uber provides insurance to US drivers. I don't think they provide it anywhere else.

The regulations that Uber is skirting are based on the problems caused by taxi drivers otherwise being anonymous. Since Uber can connect drivers to rides and handles payment the problems that plagued pre-regulation taxis aren't a concern in this case. We shouldn't reflexively assume that all regulation is bad, but we shouldn't reflexively assume that all regulation is good either. As with Chesterton's fence, always l…

> taxi drivers otherwise being anonymous.

Everywhere I take taxis the drivers have to display their name and id. Or did you mean something else by 'anonymous'?

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

#85
post #64

Earlier quoted context omitted.

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.

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.

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.

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

#86
post #25

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…

> Public safety regulations are not pointless red tape. This is the typical refrain of people who are trying to pitch pointless red tape; "it's about public safety!" Of course, 90% of regulations in any given industry have nothing to do with "safety" and everything to do with sustaining the bureaucracy that created them. Even those regulations that are nominally intended to increase safety are often counterproductive…

Read my sources and tell me this is not a consistent problem. Oakland just experienced a similar tragedy.

> "This is a typical refrain.." Saying this is a common refrain doesn't make it false. It just shows that you have no counter argument...

> "Of course, 90% of regulations have nothing to do with "safety" and everything to do with sustaining the bureaucracy that created them... Do you have any actual support for this premise? Read the thesis I cited, read almost legislative history for any safety regulation and you will see regulators citing specific data on harm to safety and how the regulation would improve safety. For that matter google a basic traffic study for an intersection and you will see the same type of analysis. Please don't pretend that regulators and law makers don't give a shit or try to do their jobs well; our institutions, and the people that run them do care and to a good job. I think the progress humanity is better now that it was when these institutions did not exist. They are not perfect, but the cynical view that they are solely focused on preserving their own position is not consistent with easily verifiable evidence of their intent expressed in writing. I would also note that many government employees could make more in the private sector which implies they are incentivized by some other means.

Further, you have the causality exactly backwards. Regulations and related bureaucracy are created to address a problem, and will continue to exist as long as that problem exists. There were no nuclear regs/bureaucrats before there was nuclear technology. Should we get rid of the city fire department the second there isn't a fire in a city? Or the military the minute we are not at war?

However, I will acknowledge that you are right that bureaucracy can become entrenched, and we should protect against that by insuring proper legislative, judicial and executive oversight. We should also set up other necessary checks and balances, and create cultural norms that prevent individual and systematic corruption. Your answer, to just eliminate regulations, wont solve this problem it will just shift the power and corruption to the private bureaucracy of corporations.

> "Are you really under the impression the competitive advantage of AirBnB comes from ignoring the fire code?..." Yes, it is my position that AirBnB has a cost advantage relative to hotels because it doesn't have to (i) comply with regulations, including but not limited to, fire regulations, (ii) pay taxes to compensate for the maintenance of government provided infrastructure that experiences increased wear and tear as result of higher traffic and use of public services (like fire and ambulances), (iii) doesn't have to cover liability insurance for injury experienced buy guests because it doesn't own the property.

> "You're making two false assumptions, one is that most regulations... have a "clear rationale"..." Read the court cases and legislative sessions where these regulations are debated in depth and tell me that there isn't a "clear rationale" when they are enacted. They often have detailed statistical reports.

> "...second...that regulations that appear to have clear rationales to some self-interested regulatory group actually do. Most people, including regulators, don't...look beyond first order costs..."

What evidence do you have to support that regulators don't look beyond first-order costs? Or are you just making that up?

You are right that some regulations have unintended consequences; and when that happens, regulators should collect data, design a superior regulation and change it. That happens all the time and I would support such a process. What is your alternative? To get rid of all regulation and only focus on maximizing utility? That would result in an absurd outcome where there is no law and there are not enforceable contracts because every law and every contract imposes a cost to utility of some party.

Let's get one thing straight, I am not arguing all regulation is good. I am arguing that if society has determined that a regulation is necessary, then ALL parties should follow the same rules, that's it. If society revises a regulation in light of unintended costs, then great.

> "the unlimited car..." You are ignoring the purpose of my argument. My point is that pretending like AirBnB / Uber are superior to traditional competitors because they offer better service rather than competing unfairly by ignoring regulations (and their associated costs) is like saying a car with an unlimited speed limit is faster than on that has to obey 40mile/hour; it is ignoring the essential question which are: which car will win a race with the same rules. If commerce is a competition, companies need to compete with the same rules or we are guaranteeing victory for anyone that breaks the law.

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

#87
post #6

Earlier quoted context omitted.

"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…

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 checking if you are booking with a big global brand,” he adds.

"By contrast, members of his association with as few as three letting bedrooms have been required to install fully wired fire alarms and fire doors. “We have had instances of people having to spend thousands of pounds,” he says. “It is extremely galling to find that fast-growing competitors are not complying with anything.”

[...]

"Airbnb rejects criticism of its fire safety measures, saying the Chief Fire Officers Association has confirmed that the advice it offers hosts is proportionate to the requirements of a family home. It encourages hosts to install safety features and, for a limited period, has offered a single free smoke/carbon monoxide detector — although it does not oblige hosts to fit smoke alarms. Its website says hosts have the option to fill out a safety card detailing emergency exit routes and locations of fire extinguishers, but this is not compulsory."

"Proportionate to the requirements of a family home" and "the option to fill out a safety card" do not thrill me as someone who has been run out of a room by a hotel fire.

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

#88
post #76

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…

Renovations don't automatically involve bringing buildings up to code. Renovations aren't required, either.

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

#89

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. Th…

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.

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

#90
post #31

Earlier quoted context omitted.

> And customers love those services. Until they die in a fire in a building that doesn't follow fire code; or are seriously injured in a possibly uninsured Uber[1] car. [1] Uber provides insurance to US drivers. I don't think they provide it anywhere else.

The regulations that Uber is skirting are based on the problems caused by taxi drivers otherwise being anonymous. Since Uber can connect drivers to rides and handles payment the problems that plagued pre-regulation taxis aren't a concern in this case. We shouldn't reflexively assume that all regulation is bad, but we shouldn't reflexively assume that all regulation is good either. As with Chesterton's fence, always l…

Injuries by drivers whose personal insurance doesn't cover their commercial activity is something I think you can lay on Uber.
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