When ‘Fairness’ Is Overrated

The governor has yet to sign HB 266, a curious development for legislation that passed the House of Representatives 61-0 and the Senate 30-8.

The bill, as described by the Legislative Finance Committee, “removes an exemption from the occupancy tax for short-term rentals (less than 30 days) by a vendor that does not offer at least three rooms within or attached to a taxable premises for lodging or at least three other premises for lodging or a combination of these within the taxing jurisdiction,” apparently in an attempt to “remove an unanticipated tax exemption for homeowners who rent rooms through third-party websites and applications.”

In other words, the bill is aimed at Airbnb.

Errors of Enchantment has explored the state’s lodging tax before, explaining that local governments are tasked with using the revenue it generates for “advertising, publicizing and promoting tourist-related attractions, facilities and events.”

But leaving the corporatism issue — i.e., local governments shouldn’t be in the tourism-promotion business — aside, HB 266 deserves the governor’s skepticism for a simple reason: It doesn’t cut the lodging tax’s rate.

Business is “booming in New Mexico” for Airbnb, the Albuquerque Journal reported earlier this year, with around 2,300 “active” Airbnb hosts, who “recorded 119,900 guest arrivals in 2016,” more than 100 percent growth over 2015.

So here’s an inconvenient question for HB 266’s advocates: With all those new, tax-paying entities funneling money into the lodging tax’s revenue stream, why not cut the rate? The bill doesn’t do that, of course, despite the gusher of new funds it could create.

If the Land of Enchantment must have a lodging tax, why not reduce its maximum rate of 5 percent, and make the state’s hospitality industry a bit more competitive?

Update (April 7): The governor has vetoed HB 266, stating that “tourism in our state is flourishing, and the prevalence of short-term property rentals helps bring more and more people to see what New Mexico has to offer.”

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