New York City's hotel tax revenue is expected to go down for the first time since 2009 and the reason for that is because of Airbnb. According to New York Post, the Independent Budget Office (IBO) said that the "hotel occupancy tax will generate $546 million in fiscal 2016," which shows a drop of $14 million from Fiscal Year 2015. The New York City fiscal year is set to end on June 30.
IBO said that "The strong value of the dollar, further additions to the supply of hotel rooms and competition from Airbnb contribute to lower occupancy rates and downward pressure on room rates."
It has been reported that the hotel tax is around 14.75 percent from the room's price. And for the state as well as city sales taxes, it adds $3.50 per night from the total cost.
According to The Real Deal, Airbnb is willing to collect occupancy taxes on its rentals. However, if Airbnb will do that then the city and so as the state's lawmakers will have to amend the current laws. That would mean that they have to legitimize Airbnb.
Reportedly, there have been proposals made that those illegal rentals will be fined more than $7,500. Helen Rosenthal, a City Council member said that by doing so, it could help boost the revenue by $10 million.
However, Airbnb sent a letter to Rosenthal and said that by doing that "could lead to bankruptcies, evictions and foreclosures of New York families struggling to make ends meet, we believe we should be working together to address illegal hotels."
The letter also pointed out on other real estate offenses such as landlords who were not able to provide heat for their residents are being charged with $500 a day. While those who cannot provide smoke detectors are asked to pay the fine of $100 a day.
Rosenthal's reaction with the letter sent by Airbnb was unexpected as she told the New York Daily News that the letter was "almost laughable if it weren't so tragic."
She then added, "Airbnb is really helping big commercial operators, not middle class families and those big commercial operators are robbing the middle class of affordable housing."