US: A recent agreement with Airbnb in Hannibal, Missouri, will ensure hosts listing rooms on the platform’s app are charging the right taxes to their guests.
Without including any city taxes, a room could be over 10 per cent cheaper as part of the agreement. It is a sign of why Airbnb has made deals with many states and cities this month as it is keen to ensure the right lodging and sales taxes are paid.
The owner of Main Street Bed and Breakfast, Michael Ginsberg, told WGEM: “I’ve been in the bed and breakfast business for a long time, long before even Airbnb, and your taxes are based on city sales tax, plus the bed tax.”
Why was the agreement necessary?
Ginsberg said that when he started listing his lodging on Airbnb, he included taxes in the price.
However, officials at the Hannibal Convention and Visitors Bureau (HCVB) said not everyone had included their taxes on the app, hence the introduction of this latest agreement.
HCVB director Gail Bryant said: “Through this agreement with Airbnb, they are able to collect all of the applicable lodging and sales tax for their host then they will remit it to the city of Hannibal.”
What does the agreement mean for the city of Hannibal?
She added that everything remained the same for the end user apart from a slight increase in price. Nevertheless, for the city, it means that more tax will be received and a more level playing field for lodging will be in place.
She said: “They probably won’t even notice a difference because the fees and everything are done online.”
Ginsberg said: “I think you know you do need to level the playing field, if someone’s product is less expensive than someone else because they’re not anteing up the expenses that they should.”
What are the existing taxes in Hannibal?
In Hannibal, there is a six per cent lodging tax for renting or leasing beds, as well as an eight per cent sales tax that need to be collected when applicable.
The HCVB requested that the city council enter into the voluntary agreement with Airbnb themselves. That was then authorised at the most recent city council meeting.