Report: Taos misses out due to ‘loophole’

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A financial impact report commissioned by the New Mexico Hospitality Association and completed by Santa Fe’s Southwest Planning & Marketing estimates the state is losing roughly $6.9 million in tax revenue due to a “loophole” in the state’s lodgers tax statute.

“Under current law [the statute] lists seven exemptions for lodging and hospitality businesses,” the report reads.

Notably, “exemption G” excludes any short-term rental that does not offer at least three rooms within – or attached to the premises – from paying the tax, which is reserved for marketing and promotion for local communities.

With approximately 645 short-term rental properties renting out an estimated 1,321 rooms, Taos County harbors a good chunk of the state’s short-term housing. The number of tax dollars potentially missed? About $1.4 million, according to the report, which used a 40 percent occupancy rate and 50 percent compliance rate to arrive at the estimate.

Karina Armijo, marketing and tourism director for the town of Taos, said the exemptions are particularly unfair given that rentals taking advantage of the exemptions – such as those listed on Airbnb – are benefiting from promotions paid for by other rental businesses that contribute their fair share.

Competition is another related matter, with the competitive advantage of exempt businesses estimated at 12 to 15 percent. Cities throughout the country have been working to even the playing field by filling in the legislative gaps.

In Taos County, Armijo explained that an “Airbnb agreement” spurred only a nominal increase in lodgers tax collections. She said that noncompliance on the part of renters who would prefer to remain under the radar makes enforcing the agreement challenging.

“The issue we have is with getting people to work with us and follow the rules,” Armijo said. “Airbnb allows certain people without a business license to be on their website, so they aren’t paying gross receipts [tax].”

Two Democrat-sponsored bills introduced during this year’s legislative sessions, House Bill 266, sponsored by Rep. Carl Trujillo, and Senate Bill 254, sponsored by Sen. John Sapien, aim to close the gaps for good. The bills are still being processed.

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