Naperville begins collecting Airbnb tax as similar taxes loom downstate
As Airbnb begins to remit Naperville’s hotel/motel use tax, some downstate municipalities are considering similar measures.
Airbnb is set to collect and remit Naperville’s hotel/motel use tax starting Aug. 1.
In February, Naperville City Council voted to increase the citywide hotel/motel use tax to 5.5 percent from 4.4 percent, and for the first time, apply this tax to short-term rental services, such as Airbnb.
The city’s decision to expand the tax to online short-term lodging services follows similar agreements the company has made with other municipalities, such as Chicago, Evanston and Rockford, as well as Cook County and the state of Illinois.
In 2017, Airbnb saw considerable growth in Naperville, enjoying a 143 percent spike in bookings over the year. Short-term rental services provide an affordable alternative to traditional hotels for visitors, and opportunities for residents to earn supplemental income. The 7,000 Illinois-based Airbnb users earn an annual average of $4,800, according to the company.
Additional challenges to short-term lodging companies may be on the horizon downstate, including the Bloomington-Normal area, where hotel operators have lobbied local governments to tax and regulate Airbnb, which they see as unfair competition. Airbnb already remits taxes to the state of Illinois, which levies a Hotel Operators’ Occupation Tax. In 2017 alone, Illinois collected $9.3 million in revenue from the company.
Ray Ceresa, president of the Bloomington-Normal Hotel and Lodging Association, told WGLT-FM’s “Sound Ideas” the area’s Airbnb listings were “taking away” business from his industry. And Ceresa’s organization isn’t alone. The Illinois Hotel & Lodging Association has also lobbied Bloomington-Normal officials for stricter regulations on their online competitors.
City officials from both Bloomington and Normal are still weighing the possibility of new regulations on short-term rentals. Champaign officials are also exploring options for “licensing, regulating, and possibly taxing short-term residential units,” despite having denied that such services have posed an issue in their communities.
Short-term rental services provide valuable and affordable lodging alternatives for residents and visitors alike. Local governments should reject calls for additional burdens on Airbnb and like services.