Airbnb—the popular service that allows people to rent out their apartments or houses to guests in need of cheap lodging—has recently been fighting battles throughout the country with cities that want a slice of the pie. In particular, city officials want those renting out their spaces through Airbnb to pay the hotel tax on the income they get from renters.
Airbnb’s owners has previously agreed that users should pay this tax, but they’ve been understandably reluctant to enforce it. The tax will make it harder for their clients to rent out their space (more forms, more regulation), and it will reduce the financial incentives to do so. Now, in New York, the State Attorney General Eric Schneiderman is looking to force Airbnb users to pony up, and has subpoenaed all of the company’s user data. But Airbnb is fighting back:
On Wednesday, Airbnb filed a motion in New York State Supreme Court challenging the subpoena. Airbnb’s petition contends that Schneiderman’s request is a “fishing” expedition because there’s no proof of any wrongdoing…By renting their couch, [representative Airbnb users] Lauren and Rob aren’t breaking the law, which requires that hosts be home while their paid guests are sleeping there. But Schneiderman’s actions could mean that they will soon have to pay New York hotel taxes every night they have a guest. (The attorney general’s office told Airbnb that the subpoena relates specifically to tax issues.) That would reduce Lauren and Rob’s nightly income by about $12 a night—or they’d have to make their guests pay taxes, which would reduce demand for their couch
And not only the company: a petition circulated by one of the Airbnb renters has already garnered over 60, 000 signatures and climbing. NYC’s effort to subpoena the data is a perfect example of the heavy-headed regulation that could crush entrepreneurial services like Airbnb. The wild west of the new app “sharing economy” will have to be brought under some regulation and oversight, but this isn’t the way to do it. Local governments need to work to encourage incipient innovation, while still ensuring new service companies fulfill their civic responsibilities. That balance is hard to strike, but NYC is far from achieving it.
[Image of Bed and Breakfast from Shutterstock]