How Taxpayers Subsidize AirBnBs Cheap Prices
How Taxpayers Subsidize AirBnBs Cheap Prices
Yves Smith
Naked Capitalism
A new Financial Times story helps quantify the degree to which AirBnB is ripping off members of the public generally to the benefit of its suppliers and customers.
A significant source of AirBnBs price advantage in the UK is tax gaming. Commercial properties pay a higher rate of tax than residential. Similarly, AirBnB hosts skirt charging VAT, since the tax applies only on businesses with more than £83,000 in annual revenue. VAT is applicable only to AirBnBs booking and service charges.
Even though AirBnB has been making concessions to local governments and is collecting hotel and occupancy in more and more communities, but AirBnB users seldom pay the same charges as hotel operators. And the Financial Times analysis shows how much AirBnB depends on tax arbitrage in one of its biggest markets. And thats before you get to the fact, as a tax maven pointed out, that AirBnB hosts in the US are likely to be under-reporting income.
The ability of AirBnB to operate at all is proof of the success of neoliberal indoctrination. Most communities have strict zoning laws. Renting out your home, even on a part-time basis, is a commercial activity. Most localities ignore violations of that distinction for businesses that dont generate traffic, such as a bookkeeper or web designer working from their home. But one of the reasons for this distinction was to preserve the integrity of residential communities and keep transients out. But it seems that nothing is to stand in the way of rental extraction in the name of the sharing economy
even when the sharing consists of pilfering from the very communities that cut businesses like AirBnB slack that they do not deserve.