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Emily Hamilton: Home sharing is a boon to Baltimore

Emily Hamilton

Emily Hamilton

Thanks in part to the AFRAM and Moonrise festivals, a record number of people used Airbnb to stay in Baltimore recently. Next year may be a different story, though: The City Council is considering a bill to tax and regulate home-sharing platforms. In addition to applying the city’s 9.5 percent hotel occupancy tax to short-term renters, the measure would slap licensing fees on people who rent out their homes to out-of-town guests and limit them to renting out just two properties.

It’s only fair for guests to pay the same tax regardless of whether they stay in a hotel or rent someone else’s place. But rather than raising taxes on Airbnb units — often provided by homeowners who simply turn unused space into much-needed side income — why not reduce the tax on hotels instead? That would allow both hotels and home sharing to thrive and make it easier for tourists to come and spend their hard-earned dollars in Baltimore.

As has been the case in other cities, Baltimore’s hotel lobby is a key supporter of the new rules. One study found that in the 10 cities with the highest Airbnb use, hotel revenue has declined by 1.5 percent. Understandably, the hotel industry sees home sharing as unfair competition when those guests don’t pay occupancy taxes. But the answer is not to make things equally hard on a competitor.

Raising taxes on the tourism industry, while popular across the country, would not be very effective. As the Monty Python policy proposal goes, “I’d tax all foreigners living abroad.” This approach makes sense on the surface — taxing visitors seems like a way to raise revenue without cutting into the paychecks of local residents or business owners.

But adding high taxes to travelers’ hotel or home-share stays leads guests to stay for fewer nights or visit cities without such steep taxes. This affects not only the hospitality industry, but also sports teams, the arts, and local stores and restaurants.

In addition to levying new taxes on home sharing, the proposal would limit hosts to renting out only two properties as short-term rentals. Any property that isn’t the host’s primary residence would be capped at 60 short-term rental nights per year. Why curtail the potential for Baltimore residents to earn income from their investments?

One of the bill’s sponsors has said that one of its purposes is to prevent neighborhoods from becoming dominated by short-term guests rather than permanent residents. However, residents benefit from having visitors in their neighborhood who support local businesses that might not be able to survive on local traffic alone. Additionally, the rule would severely harm local residents who are currently making a living by managing a few short-term rental properties.

Short-term rental units can offer homeowners a way to recoup some of the costs of a mortgage, support their retirement or family, or just make a little money to put in the bank. The ability to lease housing — whether long term or short term — has long been understood to be a fundamental right of homeownership. Baltimore should empower its citizens to make the best possible use of what they have rather than denying this right to people who are all too often simply trying to get by.

Home sharing also presents out-of-towners with a way to experience (and spend money in) Baltimore neighborhoods beyond the usual destinations around the Inner Harbor and Harbor East. And it can offer a more affordable option than hotels for people on a budget who would not otherwise be able to visit the city — for example, families who require more than one hotel room.

The hospitality industry deserves fair treatment, but it should not be allowed to shape legislation that would chase much of Baltimore’s home-sharing industry out of town. The city should look out for everyone’s best interests, whether that means hotels, residents who rent out their homes, or local businesses who stand to gain from a thriving tourist scene.

Emily Hamilton, a graduate of Goucher College, is a research fellow with the Mercatus Center at George Mason University’s State and Local Policy Project.