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Portland Measure 26-194 - Transient Tax

MEASURE 26-194, AMEND CHARTER TO CHANGE SCOPE OF TRANSIENT LODGINGS TAX OFFICIAL TITLE: AMENDS CHARTER: AUTHORIZES COUNCIL TO CHANGE SCOPE OF TRANSIENT LODGINGS TAX OBLIGATIONSQUESTION: Shall City Council be authorized to impose Transient Lodgings Tax obligations on online businesses and others without further voter approval?FINANCIAL IMPACT: There is no impact to property taxes from this measure. If the measure passes, some online booking agents will pay increased taxes for lodging booked within the City of Portland. City officials have estimated increased revenue of between $750,000 and $1,000,000 per year.PROBABLE RESULTS OF A “YES” VOTE: The Charter of the City of Portland will be amended to allow the City Council to interpret any of the terms in the Charter section on Transient Lodgings Tax, especially the terms “owner or operator” and “for lodging”.PROBABLE RESULTS OF A “NO” VOTE: The Charter of the City of Portland will remain as it is. The City will not be able to use the Charter to require booking agents to pay increased taxes. BACKGROUND: The chapter of the Charter of the City of Portland concerning the Transient Lodgings Tax was adopted in 1971, before the advent of online booking agents like Orbitz© and Expedia© and before sharing economy companies like AirBnB© and HomeAway©. The chapter allows the City to levy a tax of 5% on the value received “for lodging” on the “owner or operator” of any space designed or intended to be rented less than monthly. In the City’s 2016-17 budget, lodging taxes were $30,600,000, or 5.1% of the general fund. When the City attempted to collect the tax from online booking agents and sharing economy companies, some of the companies protested in court that they were not the “owner or operator” and that the fees they received were for the service of linking owners and operators with prospective renters, and not “for lodging”. The result of one case was a ruling in U.S. District Court in 2016 that HomeAway© was not covered by the Charter’s wording, so the City does not have authority to tax them. SUMMARY OF MEASURE: This measure adds the following one-sentence paragraph to Chapter 7-113 of the Charter on the Transient Lodgings Tax: “In addition to any other authority granted under this Charter, the City Council shall have power and authority to provide for the administration of, and interpretation of the terms in, this Section 7-113 by ordinance as legislative action, as the Council may deem necessary and appropriate.” This would allow City Council to define “owner and operator” and “for lodging” in any way it deems necessary and appropriate.
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Pros & Cons

SUPPPORTERS SAY:   Companies are exploiting the wording of the Charter, not only to avoid a legitimate tax, but also to avoid complying with regulations intended to ensure the safety of those who use their services.

Pros & Cons

OPPPONENTS SAY:    Giving the City blanket authority to re-interpret simple terms is an extremely bad precedent.  If City Council wishes to tax companies other than owners and operators who are providing services other than for lodging, they should define the companies and services explicitly in the Charter.

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