Hoteliers demand Tel Aviv taxation on Airbnb room

Without proper tax enforcement the government may be losing out on NIS 175 million a year.

June 14, 2015 22:15
2 minute read.
Carlton Tel Aviv

Carlton hotel in Tel Aviv. (photo credit: CARLTON TEL AVIV)


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Israel's hoteliers on Sunday called for taxes and enforcement action against people who rent out rooms for tourists, as has become popular with services such as Airbnb.

In a letter to Tel Aviv Mayor Ron Huldai and the Finance Ministry, Hotel Association CEO Eli Gonen said the city was allowing a black market that was depriving hotels of business.

"Unlike other cities in the world, Tel Aviv allows the growth of illegal apartments for use of tourists in the city, without organized reporting and without compliance with the municipal laws and ordinances," Gonen wrote. He estimated that 6,500 apartments in Tel Aviv are rented out to tourists, with the number growing to 10,000 across the nation.

Not everyone agrees with Gonen's assessment. In a recent interview with The Jerusalem Post, Hilton Vice President Oded Lifschitz said that the global increase in tourism was so fast that hotels needed to keep investing in order to keep up. The number of global travelers, he said, is expected to grow from 1.2 billion this year to 2 billion in 2018.

"We don’t see it as competition, but another element in people’s movement around the world," he said of Airbnb. "It’s actually letting young people who can’t afford to stay in hotels travel." Similar legal and regulatory questions have surrounded other companies in "the sharing economy." Regulators have struggled with whether to treat providers as their own businesses, employees of the company making the connections, or none of the above.

In places where Uber allows ordinary drivers to turn their cars into makeshift cabs, for example, there have been questions as to how the drivers are insured and compensated. When people get together for meals through Israeli app EatWith, questions have arisen as to who bares legal responsibility in the case of, say, food poisoning.

Gonen advised the Finance Ministry that it could help bring down the cost of housing by putting "illegal" Airbnb apartments back on housing market. Finance Minister Moshe Kahlon has proposed converting offices into residential apartments to help increase the housing supply. The price of housing has been on the upswing since 2007, well before Airbnb was founded.

Without proper tax enforcement, Gonen added, the government is losing out on NIS 175 million a year.

A Tel Aviv municipality spokesman said Monday that the city was fully complying with the law and enforcement efforts against residential apartments being used outside legal bounds.

However, the city also accepted that the advent of new technology is changing how tourism operates, and commissioned a study to examines how to accommodate a variety of price points for tourists and the effects on the local economy.

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