Chicago’s new ordinance will punish visitors to the city with a 21 percent hotel tax bill.
On June 22, Chicago City Council passed an Airbnb ordinance that would increase taxes on short-term rentals to 21 percent. The vote was 43-7.
The ordinance moved quickly through council chambers. Chicago Mayor Rahm Emanuel first introduced the measure on Jan. 13, and later pushed through an amended version of his Airbnb ordinance on May 18, just minutes before the full City Council meeting.
The short-term rental ordinance, dubbed the “Airbnb ordinance,” would impose an additional 4 percent surcharge on short-term rentals on top of Chicago’s 17.4 percent hotel tax. Additionally, this ordinance will track rental hosts by requiring the housing platform to submit a list of the addresses of hosts in a particular ward. The new rule also includes a $60 fee to help the city enforce laws to curtail wild partying and illegal rentals. This fee is on top of the 4 percent surcharge on short-term rentals and on top of Chicago’s 17.4 percent hotel tax. Additionally, it gives Emanuel is including a feature whereby Chicagoans would have the ability to vote against having short-term rentals in their individual precincts – akin to voting for “dry” precincts where establishments cannot sell alcohol.
Similar to the established players in the case of ridesharing, the hotel industry shelled out thousands of dollars to aldermen to secure their support for the anti-Airbnb measure. According to the Illinois State Board of Elections, in the past year, aldermen and their ward organizations took in nearly $30,000 from the Illinois Hotel & Motel PAC.
If the guiding principle were to protect the community from danger, there would have been no need to include a 4 percent tax on top of one of the highest hotel taxes in the country. Just as with hotel stays, this entire tax burden is shouldered by visitors to Chicago. However, Emanuel and the aldermen saw a potential cash cow and didn’t hesitate to throw visitors under the bus to protect the hotel industry. Chicago has one of the highest tax burdens in the country, and with ordinances such as this, it continues to get higher.