Austin lodging tax increase plan put on hold

A complex proposal for the improvement of Austin’s downtown that would include a 2 percent lodging tax increase will have to wait. Mayor Steve Adler said the plan will be put on hold until newly hired City Manager Spencer Cronk can take a look at it in the spring.

Adler’s proposal would provide for more help for the homeless and fund cultural projects and public works, including a possible expansion of the city’s convention center. Adler has characterized the plan as a “Downtown Puzzle” to address challenges facing the city’s core.

The proposed increase would bring the total tax rate to 17 percent for guests paying for short-term accommodations in Austin. Currently, the total rate in Austin is 15 percent, including city and state taxes. The city’s hotel occupancy tax rate is 9 percent — a 7 percent occupancy tax and an additional 2 percent venue project tax. Short-term rental operators in Austin must also collect a 6 percent state tax that is filed separately with the state.

Airbnb collects the state tax on behalf of its hosts, but Austin Airbnb operators are still responsible for collecting and remitting the city tax on their own. Hosts who use vacation rental platforms other than Airbnb, such as VRBO or HomeAway, need to take care of both the state and city tax since those platforms do not collect them.

Automated solutions that calculate the right tax rate — no matter how much it changes — and ensure that taxes collected go to the right agency can make this a lot easier for Austin short-term rental hosts and help them avoid penalties for noncompliance.