Sponsored by two Democratic state senators, Senate Bill 584 will be presented to the California legislature.
A new tax proposal in California aims to tackle the state’s affordable housing crisis and assist low- and middle-income residents
The bill calls for the implementation of an occupancy tax on short-term rentals, such as those offered through platforms like Airbnb. The revenue generated from this tax, set at 15% of the rental price, will be directed toward funding new housing construction projects.
California has been grappling with a severe shortage of affordable housing, and despite Governor Gavin Newsom‘s efforts to address the issue, progress has been limited. Data from the Construction Industry Research Board reveals that only 13% of the 3.5 million homes promised by Newsom have received permits. The lack of affordable housing has had a detrimental impact on both the state’s economy and its low-income residents.
Lawmakers argue that part of the problem stems from the increasing number of homes being rented out as short-term rentals, which reduces the availability of housing for long-term residents
To counter this, the proposed bill defines short-term rentals as occupying a property for 30 days or less, excluding hotels, inns, motels, and bed and breakfast establishments.
If approved, the legislation will allocate funds for low-income housing projects until 2033 through the Laborforce Housing Financing Act of 2023. The bill also sets a timeline for enactment, with the new tax going into effect on January 1, 2025. The urgency of the legislation is emphasized by its supporters, who argue that immediate action is necessary to address the statewide affordable housing crisis.
The proposed tax has faced opposition from Airbnb, which has expressed concerns about its potential impact on hosts. The company encouraged its affiliates to voice their opposition by contacting the California Senate Appropriations Committee. However, the bill aims to prioritize the urgent need for affordable housing and prepare for the collection and distribution of funds to address the crisis.
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