RACINE — The Racine City Council passed a resolution Tuesday night authorizing the mayor and city clerk to enter into a tax-collection agreement with hospitality company Airbnb.
Once signed, the tax agreement will allow the company to collect tourism room taxes on behalf of its Racine hosts and remit the revenue directly to the city. With the agreement in place, Racine will benefit from people visiting the city through home sharing.
Effective June 1, Airbnb will automatically collect and remit the Racine room tax of 8 percent for taxable bookings.
“Collection can happen without additional burdens on an already overworked and understaffed clerk’s office,” Mayor Cory Mason stated. “It also makes it possible for the city to start collecting revenue as soon as next month.”
Collecting and remitting hotel taxes can be complicated. The rules were designed for traditional hospitality providers and large hotel corporations with teams of lawyers and accountants.
Airbnb has partnered with more than 370 local governments throughout the United States to collect and remit taxes, making the process easy for hosts to contribute new revenue for local governments.
This marks Airbnb’s fourth tax agreement in Wisconsin.
Last year, the company announced an agreement with the Wisconsin Department of Revenue to collect and remit state sales taxes on taxable bookings throughout all of Wisconsin.
“We believe this partnership will unlock significant new revenue for Racine moving forward,” stated Laura Spanjian, Midwest policy director for Airbnb. “In addition to our existing tax agreements with Madison and Green Bay, we hope this agreement can serve as a model for other Wisconsin municipalities looking to take full economic advantage of the sharing economy.”
According to Wednesday’s release, statewide data indicates that Airbnb and host communities appear to be complementing, rather than competing with, the Wisconsin hotel industry.
Reports from Wisconsin Hotel and Lodging Association demonstrate that Wisconsin hotel occupancy rates, daily prices and revenue have grown steadily, in parallel to Airbnb’s growth.
“Collection can happen without additional burdens on an already overworked and understaffed clerk’s office. It also makes it possible for the city to start collecting revenue as soon as next month.” Racine Mayor Cory Mason