The Massachusetts State Senate is looking at a bill that would install a tax on rooms rented through AirBnB to help the state pay for an increase in its Earned Income Credit.
According to MassLive, the state Senate Ways & Means Committee plans to apply the existing hotel room tax to short-term rentals, which would impact on-demand apps such as AirBnB. The senate committee believes between $13 million and $20 million could be raised this way, in order to offset an increase in the state EIC rate.
Limiting the EIC to full-time in-state residents – instead of allowing for out-of-state residents who work in Massachusetts – would add another $8 million - $10 million.
A spokesman for tech sector companies told MassLive the proposal would stifle growth in that particular economic sector and would unfairly apply a tax meant for large brick-and-mortar hotels to individual entrepreneurs.
Even with the expanded hotel room tax and a narrowed EIC, the state would still have to come up with more than $20 million every year to make up for the expanded tax credit amount.