Second N.J. city to tax Airbnb home rentals

By Dan Ivers | NJ Advance Media for NJ.com
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on April 12, 2016

Baraka, in a file photo, approved the agreement.

 

NEWARK — Newark has reached an agreement with online home-rental service Airbnb that would impose a 6 percent tax on the company's dealings in the city.

City officials confirmed the deal, which essentially taxes Airbnb at the same rate as city hotels, in a statement Tuesday morning.

"The people of Newark need to be able to benefit from the companies that do business in our city," said Mayor Ras Baraka. "Bringing Airbnb under regulation is only fair to other lodging businesses. I am very pleased that Airbnb was so cooperative in negotiating the agreement."

Negotiations apparently began after the city had trouble collecting revenue from individual residents who rent their homes through the service.

Baraka said Airbnb will now be responsible for collecting and paying the levies, which could bring the city as much as $750,000 in additional revenue over the next year.

The agreement also limits customers from renting a home for more than 30 days, and bars them from renting more than five properties to prevent the spread of "informal Airbnb hotels."

Max Pomerance, the company's regional head of public policy, released a statement saying he considered the deal with Newark a model for its business across the country and the world.

"For years we've said we want to work with local governments - including New York - to collect and remit taxes on behalf of hosts, and today is a good example of elected officials acting thoughtfully and representing the many Newark residents who have embraced home sharing," he said.  

Newark will become the second city in New Jersey to tax Airbnb, following in Jersey City's footsteps. City officials are also engaged in a high-profile fight to regulate Uber, another so-called "sharing" service that has shaken up traditional business models in recent years.

City Communications Director Frank Baraff said the tax will go into effect without approval from the City Council, though formal legislation will likely be drafted to put before the body in the weeks to come.

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