Mr. Mayor: Stop supporting tax cheats

Businesses don't write the law books, remember?


EDITORIAL Mayor Ed Lee's love affair with all things tech shouldn't extend to allowing a large company to cheat on local taxes.

It's no secret that Airbnb, the successful startup that allows people to share their apartments as hotel rooms, has failed to collect or pay San Francisco's Transitory Occupancy Tax, which every traditional hotel has to pay. Our stories have shown that the city is losing $1.8 million a year, and that number will only grow as the service becomes more popular.

The company claims that all it's doing is facilitating private transactions. But the city's treasurer, Jose Cisneros, has investigated the situation and ruled that Airbnb is liable for collecting and remitting the tax. It's not that hard — the company could simply add the 14 percent onto the prices on its website, make sure the people renting out their homes receive that money, and turn it over to the city.

But that would open the "sharing economy" site to similar rules in all the other cities where it operates. It would force Airbnb to admit that it's a business, like any other business, and that the Internet hasn't made obsolete the notion of following the rules that apply to everyone else in the same line of work.

So the company, funded in part by investor Ron Conway — a close ally of the mayor — takes unfair advantage of the situation, refuses to pay taxes, and undermines the existing hotel industry, which not only pays taxes but employs thousands of San Franciscans.

Lee was asked about the situation on a recent edition of KQED's Forum, and when host Michael Krasny pushed him, Lee said: "They're not so much dodging it, they're making arguments, like any business would, about what applies to them and what doesn't."

That's flatly, factually untrue. Airbnb has already had a chance to make its arguments — to Cisneros — and he rejected them. The company could go to court to overrule the treasurer, but it hasn't. It could go the Board of Supervisors and seek to have the Hotel Tax modified, but it hasn't. The people who run Airbnb aren't making any arguments at all, in any public forum; they're just refusing to pay.

And the mayor is not only letting them get away with it but defending the practice.

This is disgraceful.

A judge in New York City has ruled that Airbnb violates local laws, and people who use it as hosts are now subject to steep fines. There, at least, the company is asking the state Legislature to modify the ban on short-term apartment leasing.

In San Francisco, most renters who sign up with Airbnb to make a little extra money by turning their apartments into hotel rooms are in violation of their leases and could be subject to eviction — something the company doesn't warn about.

It's time for the supervisors to pass legislation regulating this industry. In the meantime, Lee needs to stop defending a company that's openly violating the city's tax laws and direct the city attorney to crack down.