In this space in 2012 and 2013, we urged that online retailers be made to charge sales tax on purchases made by Wisconsin residents, so as to level the playing field between online retailers and businesses with a brick-and-mortar store in the Badger State.
The same principle should be applied to those who offer residences through online short-term rental websites without getting licensed and paying taxes.
The Wisconsin State Journal reported Monday that since late last summer, Public Health Madison and Dane County has received 32 complaints against properties listed on websites such as Airbnb and VRBO (Vacation Rentals By Owner). All of the complaints have been filed by people connected with the Wisconsin Bed & Breakfast Association, according to the health agency.
Bed-and-breakfast owners across the state use clues in photographs included in Airbnb and VRBO listings to determine locations of rentals, and then lodge complaints against operators of unlicensed short-term rentals.
Dusan “Duke” Mihajlovic, owner of the Oscar H. Hanson House Bed & Breakfast in Cambridge, said he regularly monitors listings on those sites in the Madison area. He told the State Journal he believes the current laws governing bed-and-breakfasts and tourist rooming houses should be enforced both for safety and for fairness to licensed businesses.
“If you’re going to have lodging, you’re supposed to have a license from the Department of Health (Services), so I let the department of health know whenever I find one because they do not have the staff or the time to hunt them down,” he said. “Some of these places are charging $50 a night. I can’t get down that low and I’m sure if they played by the regulations, they couldn’t get down that low either.”
Mihajlovic is, obviously, acting in the interest of his own business. But he’s right about a fundamental point: This playing field should also be level.
Those who offer residences through online short-term rental websites should be required to obtain a license and pay taxes on each rental. They should be required to play by the same rules as, for example, any of Racine’s bed-and-breakfast business operators.
But to be clear, we’re not looking to turn this new revenue collection into a blank check to be eaten up by more government spending. Once the users of the online sites have been brought into compliance, we’d have no issue with lowering the sales tax rate for all short-term rentals, so that the online-generated revenue doesn’t become another piggybank for the state government to raid.
But that’s Step 2. Step 1 is leveling the playing field.