A new provision in Pennsylvania’s tax code could be a boon for local governments that collect a hotel occupancy tax — including Centre County.
Under the new law, Airbnb has started collecting county hotel occupancy taxes statewide, according to company spokesperson Liz DeBold Fusco. The company generates at least $10 million to $15 million in annual revenue in Centre County, which means the Central Pennsylvania Convention and Visitors Bureau could see hundreds of thousands of dollars in new hotel tax revenue from Airbnbs, county commissioners Chairman Michael Pipe said.
The commissioners voted to double the county hotel tax from 2.5 to 5 percent in February. Most of the added tax — which goes into effect Monday — goes to the CPCVB, which doles out 20 percent of the money to local nonprofits that attract tourists to the area through events and programs. Much of the rest goes to marketing and branding efforts. Under the amended hotel tax, the county also takes a 4 percent cut for tax processing services.
Airbnb announced it will remit hotel occupancy tax from reservations booked in the county starting March 15, according to an email sent out to Airbnb property owners and obtained by the Centre Daily Times. Airbnb is an online homesharing platform, whereby property owners may rent out rooms or full homes and apartments to customers. The company acts as a booking agent for home reservations.
But county Treasurer Richard Fornicola said he didn’t hear anything from Airbnb until a company representative contacted him Tuesday, asking for the county’s hotel tax ordinance and how to become registered as a booking agent in the county.
The county has experienced “exponential growth of Airbnb over the last several years,” Pipe said. But up until an amendment to the state tax reform code of 1971 went into effect Jan. 22, booking agents like Airbnb did not have to remit a hotel occupancy tax to the state or local governments. Now, all Airbnb reservations in Pennsylvania are subject to a 6 percent state tax and any local hotel taxes.
As a result, the added taxes will be passed on to consumers making reservations. In Centre County, state and local taxes will add 11 percent to the total cost of a customer’s reservation.
Airbnb announced it would start collecting local hotel taxes of its own accord, Pipe said. The company confirmed that.
“I strongly believe that Airbnb saw what we were doing with the revenue from the hotel tax and the projects the (Central Pennsylvania Convention and Visitors Bureau) was working on,” Pipe said.
“Airbnb is an economic mobilizer for everyone, from families sharing their home to make ends meet, to the small businesses benefiting from more guests shopping and eating locally — and now to Centre County, which will join local governments across the Keystone State and worldwide in receiving a new source of tax revenue from home sharing,” said Josh Meltzer, head of northeast policy for Airbnb, in a statement. “We hope this will also serve as yet another clear example of the economic potential of home sharing in Pennsylvania.”
In mid-March, Airbnb reservation totals for Penn State commencement weekend May 2 through 5 had already exceeded total bookings for the 2018 commencement weekend, according to the company. Last year, 1,500 guests stayed in Airbnbs in State College during commencement weekend, and this year 1,600 guests are estimated so far, spokeswoman DeBold Fusco said.
Local hosts are projected to make over $365,000 that weekend, she said.