Short-term rental tax must be rejected

If you tax something, you get less of it. Which is why California’s housing and homelessness crises only would be made worse by raising taxes on any type of housing. But that’s exactly what would happen with Senate Bill 584, by state Sen. Monique Límon, D-Santa Barbara.

In the bill’s language, it would “impose a tax on the occupancy of a short-term rental” of 15%, meaning on Airbnb, Vrbo and other online booking sites, which people use to rent out rooms and homes.

“It’s not enough just to say, ‘We’re going to build and make it easier to build,’ if you actually don’t have the resources to do it,” Límon told the Sacramento Bee. “Everyone in our community has a vested role to play in investing in how we solve this housing crisis.”

Yes, and the way to do that is to encourage more housing, not limit it with a new tax.

“This is a misguided attempt to address California’s housing crisis,” Sen. Janet Nguyen, R-Huntington Beach, told us. “Penalizing property owners and consumers and stifling the short-term rental market with excessive taxes will only further exacerbate the affordability problem, discourage investment for retirement and limit housing options for both residents and visitors.”

The Senate Appropriations Committee estimated SB 584 “potentially” would raise $150 million a year. Of course, imposing a tax on short-term rentals will end up increasing the costs of said rentals, deterring people from seeking them. This will hurt both the purpose of the tax as well as the ability of those offering short-term rentals to earn income.

“SB 584 would harm California’s travelers, its vacation rental community, and the network of small businesses that depend on them,” Alyssa Stinson, California government and corporate affairs manager for Expedia Group, said in a statement to CalMatters. That’s something lawmakers should take seriously.

The bill also would mandate all construction of low-income housing from those funds must use project labor agreements, which require high labor-union wages even for private contractors, greatly increasing the cost. In other words, what SB 584 seeks to do is punish short-term rental owners and consumers in order to reward politically well-connected unions with expensive contracts.

On May 31 the bill passed with the minimum of 27 votes in the Senate. Commendably, it was opposed by Democrats Steve Glazer of Orinda, Marie Alvarado-Gil of Modesto and Bill Dodd of Napa. Democrat Dave Min of Irvine did not vote.

Unfortunately, it was supported by supposedly moderate Democrats like Sens. Tom Umberg of Santa Ana and Josh Newman of Fullerton. They should walk around their districts and talk to some Airbnb folks who rent their homes before voting to punish them.

We recommend the Assembly reject this anti-housing bill. And if the Legislature really wants to promote housing affordability, it should begin by repealing all existing laws imposing project labor agreements and adopting much needed California Environmental Quality Act reform.