Collaborative consumption is the idea that individuals or entities can share, trade, swap, or rent products and services rather than sell or own them outright. The term was first coined in the late 1970s to describe car-sharing and carpooling but has expanded recently through the Internet and social media.
Zipcar and Car2Go, Internet and mobile-app based short-term car rental companies, are popular in DC and other metropolitan areas and provide travelers with easy and accessible transportation. “Access economy” is another term used to describe these services.
Another peer-to-peer innovation is AirBnb, which connects travelers with property owners by offering short-term living accommodations. For instance, if I wanted to travel to San Francisco, I could log onto AirBnb and find a couch or spare bedroom to occupy for a few days.
The cost ranges from just a few dollars (I found a top bunk in San Francisco for $15 for one night) to into the hundreds and thousands of dollars. AirBnb was founded in 2008 and now boasts places to crash in over 30,000 cities in 192 countries.
It’s free to list space and browse, and the company charges just 3% of the list price upon successful booking. After a number of high-profile robberies and acts of vandalism committed against hosts, the company now provides a $1 million insurance policy. However, there are always risks involved when opening one’s home to strangers.
Revenue-hungry bureaucrats in some cities see AirBnb as a threat to tax dollars collected by hotels.
A recent study revealed that $12.7 million was spent renting space through the site in the last year, which means San Francisco “lost” $1.9 million in hotel tax revenue. To put that into perspective, the city’s FY 2011-2012 budget totaled over $6.5 billion. San Francisco Treasurer Jose Cisneros said in April of this year that AirBnb is responsible for collecting a 15% tax on all rentals in the city.
In addition to this pressure from city-level bureaucrats in San Francisco, then-Governor Arnold Schwarzenegger signed a law in 2010 that forces businesses that engage in monetary transmission to obtain a license. This requirement will likely apply to AirBnb and other online services that collect payments from one party and distribute the funds to another party (PayPal transactions will also apply). The fee to obtain a license is $5,000, not to mention the auxiliary costs that might apply.
The additional taxes and passing on the costs associated with acquiring a license make a simple peer-to-peer room share as costly as a stay in a hotel. And who knows what else regulators might think of next? Will hosts have to provide all the complementary furnishings of a hotel? Will there be checkout times? Continental breakfast? Will building and codes inspectors force themselves on your property before you’re allowed to list it?
The unbound Internet has transformed our economy and created new markets. Innovators have made life simpler, easier, and cheaper. Meddling bureaucrats who seek to extract every penny they can from productive endeavors continue to threaten and even stifle innovation and new products and services, oftentimes at the behest of entrenched business interests.
It’s up to liberty-loving consumers like us to push back against these bureaucrats in support of our friends the innovators and entrepreneurs.
Matthew Hurtt is a libertarian activist, hell-bent on exposing ridiculous government regulations. Follow him on Twitter @matthewhurtt.
Source: AFF Doublethink Online | Joseph Hammond
Source: AFF Doublethink Online | Emma Elliott Freire