Short term rentals could hurt economy if tax isn't paid

Several hotels and condos across the coast are claiming that the private rental industry could be hurting the local economy. The claim is that some homeowners who rent out their properties are working with an unfair advantage.

"For the vacationer from out of state it's probably a pretty good cut to the pocketbook," said Bruce Driggers. He and his family are visiting from Arkansas. They chose a hotel this time around, but if they were looking for a rental property and came across one that charged a tax and one that didn't, the choice would be obvious. "We would choose the no tax, the cheaper on the pocket book," said Driggers.

That would be the choice of most vacationers which is bad news for the Mississippi Hotel and Lodging Association. Executive Director Linda Hornsby has been receiving reports from hotel owners about numerous rental homes in the area that don't pay a tourism tax. She conducted her own search on popular rental sites, such as Vacation Rental By Owner or VRBO. "I came across 2 dozen in this area on VRBO alone that don't claim the tax," said Hornsby.

WLOX News heard from one property owner who rents out homes.  She noted she follows state law.  If a home is rented on a short term basis for vacationers, she abides by the rules and pays the tax.  But, if it's a long term rental, that tax doesn't apply.  She's even approached the city and asked for an ordinance to regulate rental properties, because like Hornsby, she doesn't want to see others skirt the system.

The 12 percent tourism tax helps pay the Coliseum's convention center debt, the Harrison County Board of Supervisors and the tourism commission. Without that being paid, Hornsby says the loss could be in the hundreds of thousands. "In other areas, they have enforcement agents through their state tax commission or department of revenue," said Hornsby.

Until recently, the number of private rentals has been relatively small, so an enforcement agent hasn't been needed. But, a recent boom in private rentals has some saying that needs to change.

Four Points general manager and Biloxi City Council president Kenny Glavan said these rental properties could be audited just like any other business. "I think as we discover those people who are in violation, we'll clean it up and it will be a win win," said Glavan.

According to Glavan, Biloxi homeowners wishing to rent out their property for a short term, should apply for city approval. The hotel and lodging association will be holding meetings to discuss how to best level the playing field.