Gov. Christie Vetoes Airbnb Bill to Tax Short-Term Rentals

by Michael A. Jimenez on August 10, 2017

Gov. Chris Christie recently vetoed legislation that would have made rentals via Airbnb and similar online marketplaces subject to the same state and local occupancy taxes as hotel and motel rooms.  According to the Governor, he would not support imposing additional taxes on “already overly taxed New Jersey property owners.”

Gov. Christie Vetoes Airbnb Bill to Tax Short-Term Rentals

The proposed legislation sought to regulate the growing home-sharing industry. Airbnb reports that approximately 6,000 New Jersey “hosts” earned more than $50 million last year.  Nonetheless, an increasing number of New Jersey municipalities are placing restrictions on short-term home rentals.  They include Palisades Park, Englewood Cliffs, Fort Lee, Lyndhurst and Glen Rock. Other cities, including Newark and Jersey City, have negotiated agreements directly with Airbnb to collect a six percent tax.

Proposed Tax on Short-Term Rentals

Under current law, New Jersey imposes the sales and use tax, along with the hotel and motel occupancy fee to the rental cost for each hotel room.  Additionally, current law authorizes municipalities to impose various taxes and fees towards the rental costs for each hotel room in those municipalities.  Currently, short-term rentals are not subject to similar taxes.

Assembly Bill No. 4587 would have imposed the New Jersey sales-and-use tax, as well as the hotel and motel occupancy fee, on “transient accommodations,” which are defined under the bill as a “room, group of rooms, or other living or sleeping space for the lodging of occupants, including but not limited to, residences or buildings used as residences.” Renters would be responsible for paying the taxes and fees.  Airbnb would oversee the collection and then remit the proceeds to the state.

The proposed bill also authorized municipalities to impose additional fees.  In addition to the hotel occupancy fee, municipalities could also impose the Atlantic City luxury tax, Atlantic City promotion fee, Cape May County tourism sales tax, Cape May County tourism assessment, municipal occupancy tax, sports and entertainment facility tax, and Meadowlands regional hotel use assessment, where applicable.

Gov. Christie’s Veto Message

On July 21, 2017, Gov. Christie vetoed the bill.  “The tax increase proposed in this bill would not only impact New Jersey property owners who have—for generations— made their homes available for short-term rentals, but would also disproportionately increase the cost of visiting New Jersey shore towns and other tourist destinations,” Christie said in his veto message.

“This area and its economy cannot and should not be jeopardized,” the Governor added.  “I cannot sign a bill increasing taxes on our citizens and, most particularly, our tourism areas.”

Airbnb had supported the bill. “We are extremely disappointed the governor decided to veto a bill that would have generated millions of dollars for Garden State residents without raising taxes,” the company said in a statement.

For more information about efforts to tax transient accommodations or the legal issues involved, we encourage you to contact Michael A. Jimenez, Esq., Counsel and member of Scarinci Hollenbeck’s Government Law Group.

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