In January, Airbnb reported hosts earned $1.1 million in Washington County in 2018. Much of this went to hosts in Johnson City and the surrounding area who often rent out their homes during large events like races at Bristol Motor Speedway.
Washington County hosts accounted for nearly half of Northeast Tennessee’s combined $2.3 million Airbnb revenues from more than 23,000 visitors.
Airbnb currently has agreements with cities including Memphis, Knoxville and Chattanooga to collect and remit their local occupancy taxes on behalf of hosts. In these cases, the taxes go directly to the municipality and can be used for economic development and tourism if local officials choose.
But such an agreement with Airbnb does not exist for Johnson City and other municipalities, according to Brenda Whitson, executive director for the Johnson City Convention and Visitors’ Bureau.
“To my knowledge, the city of Johnson City is not collecting any (local occupancy) tax (directly) from any Airbnb,” she said.
As it stands now, Johnson City Finance Director Janet Jennings said Johnson City only gets local lodging taxes directly from hotels, motels and “some from ETSU, where they do some housing.”
“That is about it,” she said. “We do get a share of the state sales tax (from Airbnb), but that’s divided out per capita based on population.”
The home-sharing and hospitality platform recently announced it delivered a combined $22.4 million in tax revenue to Tennessee last year after the first year of its statewide tax agreement, which took effect on March 1, 2018.
Airbnb initially expected $13 million in tax revenues for the state after coming to an agreement with the Tennessee Department of Revenue authorizing the home-sharing platform to collect and remit taxes assessed by the state. The tax agreement applies to collections from the 7% sales tax and local option ranging from 1.5 to 2.75%.
“These people are now taking part in the local tourism economy,” Airbnb spokesperson Ben Briet said. “These tax agreements allow Airbnb to collect on behalf of the hosts. Instead of having them figure that out, Airbnb takes that responsibility.”
State Sen. Rusty Crowe, R-Johnson City, said the tax revenue numbers are indicative of the growth Tennessee and the local region has experienced in terms of tourism and economic development.
“This is good news as the revenue received has exceeded our projections,” he said. “These are tax dollars paid in great part by people passing through or visiting from outside our region.”
While Crowe said sales taxes are coming back to Johnson City from Airbnb due to the agreement with the state as a whole, Crowe pointed out that a local occupancy tax similar to what other cities have elsewhere would allow the city to invest more in economic development and tourism specifically.
“The $22 million you see is state and local sales tax. That is going to Johnson City and every other city there is an Airbnb, so they’re getting their local share,” he said.
Most state and local sales tax revenues go to general government expenditures and things like education expenditures.
“I think it would be advisable for them to talk about the occupancy tax agreement like the other cities have. I think it’s a matter of getting together with them,” he later added.