During the Board of Supervisors’ final budget work session Monday, Supervisor Ron A. Meyer Jr. (R-Broad Run) proposed exempting bed-and-breakfast businesses from the county’s transient occupancy tax.
Meyer’s proposal would exempt hotels—a blanket term which is not distinct from other visitor accommodations such as bed-and-breakfasts in Loudoun’s ordinances—with a maximum occupancy of 25 guests or fewer from the tax. Meyer said that is to put them on an even footing with short-term rentals listed on Airbnb and VRBO.
“The bed and breakfast industry feels like they’re unfairly treated because Airbnbs are not taxed, they’re not regulated, and some people say the solution is to regulate and tax the Airbnbs,” Meyer said. “And what I’ve always said, the solution is actually let’s make sure that there is a level playing field, but let’s actually bring down the taxes on the B&Bs.”
In fact, listings on Airbnb are not exempt from taxation and regulation. Concerns sprang up in government and the hospitality industry around sites like Airbnb due to a lack of oversight, which meant that many Airbnb hosts were not reporting their income to the government or paying taxes on it.
In 2017 and 2018, county supervisors launched a project to regulate short-term residential rentals such as on Airbnb, resulting in a requirement for those hosts to register with the county government. Where before the county did not have a system for tracking those rentals, with the registry other supervisors hope they can require those rentals to pay the same taxes and meet some of the same safety standards as other businesses.
Meyer opposed that process, accusing tourism nonprofit Visit Loudoun advocating the change of having a conflict of interest. The nonprofit, which works as the county’s tourism arm, draws a membership fee from hotels and has representatives of the hotel and bed-and-breakfast industries on its board of directors.
Those attacks drew rebukes from other supervisors, who called that “grandstanding” and pointed out among other things that the county’s agreement with Visit Loudoun provides that it will “represent the tourism industry to policy makers and provide tourism perspective and recommendations regarding land use and zoning, funding opportunities, and other legislative issues that directly impact the tourism industry.”
On Monday, the board of supervisors diverted Meyer’s proposal to the county finance committee for further study.
“The industry has been thriving,” said Supervisor Geary M. Higgins (R-Catoctin). “The industry has never come to me about eliminating TOT tax. The industry has come to me and said, ‘we don’t want to be overregulated by the county,’ and that’s what we did. We wrote regulations so they would be able to compete.”
Supervisor Matthew F. Letourneau (R-Dulles) said while the proposal could have a budgetary impact, it is a policy change, not a budget line item. He referenced “the painstaking process by which we went through the Airbnb ordinance amendments, and the extensive amount of input that happened.”
Meyer said the Board of Supervisors’ work on the registry is “a big government” approach, characterizing it as raising taxes despite no change in tax rates. Nonetheless, supervisors voted unanimously to send the proposal to committee.
Currently, businesses renting rooms to fewer than four people at a time are exempt from the transient occupancy tax. Above that, the tax is 7 percent. Those renting out fewer than seven bedrooms and showing less than $4,000 gross receipts are exempt from the business, professional, and occupational license tax. With seven or more bedrooms and up to $200,000 gross receipts, businesses pay a $30 license fee, and above that, 23 cents per $100 of gross receipts.