Michigan House committee considers tax on short-term rentals
(CBS DETROIT) - Short-term rentals in Michigan could soon be subject to an additional tax and more regulations, a move supporters say will help offset the costs to municipalities. However, opponents say it could have a negative impact on our tourism.
"The creation of a 6% excise tax in this legislation is representative of our communities needing some ability to recover from this tourist activity and reinvest in our communities," said state Rep. Joey Andrews during his testimony last month in front of the Local Government and Municipal Finance Committee.
Andrews said he foresees the money from the tax being used for things like public safety and infrastructure improvements in municipalities where tourism is high.
"This issue is paralyzing for a lot of our city councils. You can't hardly go to a meeting in South Haven or Saugatuck and oftentimes New Buffalo without this being an issue on the table from residents in some form or fashion," Andrews said.
Testimony on the bill package earlier this month exceeded the amount of time the committee had to hear everyone. More than 150 people submitted cards in support of the legislation but did not want to speak during the committee meeting from cities all across the state like Saint Joseph, Berkley, Farmington Hills and Cadillac. But opponents of the bill package say it infringes on property rights and could have a negative impact on the economy.
"This proposal, in particular, really seeks to insert heavy-handed state regulation and taxation instead of actually addressing a property right or the ability for someone to rent," said Brad Ward, the vice president of public policy and legal affairs for Michigan Realtors.
Ward said Michigan already has taxes set up for short-term rentals.
"Short-term rentals are already obligated to pay a 6% use tax to the state of Michigan," he said. "So when you look at the bill package that's been introduced, if you take the 6% use tax, include this new 6% excise tax plus all of the local accommodation taxes, whether that be for convention and visitors, bureau, stadium districts, things like that. The effective tax rate for a short-term rental is significantly higher than it would be on a traditional lodging facility."
The bill package is currently still sitting in committee.