Sharing Economy
As Internet commerce matures, taxes a sure bet
What is often called the “sharing economy” has had a big impact on many people. Individuals offer products and services to others, most often through an Internet business that matches them with those looking for what they have to offer.
A good example is a service like Uber, where people can earn money by using their own vehicles to pick up passengers and take them wherever they want to go. Uber acts as a booking services and handles payments on both sides of the transaction—in exchange for a cut, of course.
Uber doesn’t operate in the Twin Cities yet, but another service does. And this one is all about sharing space.
Airbnb.com lets local residents rent out a room or even the whole house to to someone visiting the area. There are several Texarkana properties listed on Airbnb’s website. Some folks prefer staying with local hosts and the price is often cheaper than a traditional hotel or apartment rental.
But the price went up a bit Monday—at least for those who choose to stay on the Texas side.
Beginning May 1, Airbnb implemented and agreement made several weeks ago with the state to start charging a 6 percent hotel occupancy tax. Airbnb will charge guests and remit the money to the state.
Airbnb already charges tax in some markets. Texas is just the latest. There are a couple of reasons. One is the hotel industry must collect state taxes—and often county and city taxes as well. The industry believes renting from Airbnb puts it at a disadvantage. And they’re right.
The second reason is the state wants its cut. Who didn’t see that coming?
The sharing economy a good thing. People like to make extra money and apparently these services are popular with paying customers.
But you can be sure the tab will rise on all sectors of the sharing economy in the future. Full-time business owners aren’t going to sit by while freelancers—and the companies that get their cut off the top—can offer consumers a product free on some taxes. And states are not going to let all that revenue get away forever.
Online business is growing up. Growing up means paying the same taxes as brickand-mortar companies—and passing the cost on to consumers. Internet shopping isn’t going anywhere, but a bit of the bargain will be going away in the future.