An Analysis of a blog post
The article/blog post by Airbnb talks about that it would start collecting taxes in San Francisco. Airbnb is an online home rental company. In other words, it is a substitute to hotels and guest houses. People can rent and book their choice of homes, and can stay nights in these homes instead of having to stay in hotels. The official hotel tax rate in San Francisco area is 14%. If the nightly stay in hotel costs $100, then additional 14% are included in the bill as tax charges which go to the government tax exchequer in the account of hotel taxes.
Airbnb was never an ardent follower of this tax reforms and voiced their concerns regarding the hotel rate being too high. Recently, it was challenge in court through a subpoena being filed against them by a local lawyer. Although, Airbnb is fighting in court, but it has come to a point where it has nodded in the favor of charging the tax and believes that around $21 million will be added to national exchequer if the company starts collecting taxes for their hosts.
The article shows that the government benefits greatly from tax reforms. This money is needed by the government to help the people who need this money in the form of social security and it is also used in creating jobs. However, if the tax rate gets too high, then people usually challenge it. A good option for the government is to negotiate with Airbnb over the tax reforms to make sure that the government gets the much needed funds, and at the same time it does not affect the financial health of Airbnb and does not make it uncompetitive against hotels and other guesthouses.
