Senator seeks to amend Room Tax to benefit municipalities

By The Star Staff

The chairwoman of the Senate Culture and Tourism Committee, Ada García Montes, announced yesterday the filing of Senate Bill 936, which mandates that five percent of the 7% of the Room Tax (which goes to the Puerto Rico Tourism Company) be allocated to the municipalities every month to cover the needs that short term rentals create in the towns.

Accompanied by several associated and federated mayors, García Montes said that the bill’s purpose is to provide more funds to the municipalities to cover the expenses involved in sustaining the growth of the visitor economy and the healthy coexistence of their respective communities.

“The filing of Senate Bill 936 does justice to the municipalities who allocate more funds for the areas of security and health to adequately manage the impact of the increase in short-term rentals in their respective towns. This would mean a redistribution of the current tax without an increase in the occupancy tax. Allocating funds from the Room Tax serves as an incentive to the municipal budget,” announced García. “We are all witnessing the increase in rentals through digital platforms such as Airbnb and others. These generate an increase in the visits received by municipalities, which requires greater security, among others; however, mayors lack monetary funds to handle these and other situations.”

In 2017, given the vertiginous increase experienced on the Island for this type of rental, the central government signed a Memorandum of Understanding with the Airbnb platform, where it agreed, among others, that the company as well as others (Join a Join, Vrbo, Home Away,) registered with the Puerto Rico Tourism Office, will facilitate collecting 7% tax on the Room Occupancy Fee or “Room Tax,” to be sent directly to the Tourism Company. This will prevent each owner of a property rented on a short-term basis under its platform from doing so on their own.

As explained by García Montes, “this 7% seeks to alleviate the administrative burdens of the Tourism Office, ensure greater compliance by the hosts and increase the capital available for strategic reinvestment. Tourism maintains this type of agreement with several platforms, which resulted in generating over $20 million. After knowing this data, we understand it is prudent to send part of this money to the municipalities to strengthen security, road infrastructure, and improve lighting, among others”.

The beneficiary municipalities may use the funds to address public safety issues (such as hiring municipal police officers, handling medical emergencies, and the purchase of equipment that this entails,) implement the Public Order Codes, address the management and disposal of solid waste, address issues of lighting, road signs and paving, as well as cleanliness and ornamental issues in their jurisdiction.

Project 936 also seeks to promote tourism and cultural activities that encourage the visitor’s economy, including hiring guides and developing tourist and cultural programs.

Luis Javier Hernández Ortiz, mayor of Villalba and president of the Mayors Association, said that the bill “represents a possible relief for the municipalities who face the increase in individual hotels without receiving funds for road maintenance, security, and services. I appreciate her efforts from the Senate to benefit the municipalities, keeping in mind that the country is built from the municipalities,” she said.

García Montes, also the Senator of the Mayagüez District, said, “we hope that the legislative measure is approved in both the Senate and the House and that it does justice to the municipalities, which are the first hand of response to the different needs. A 5% of the Room Tax amount is a fair amount to contribute to the municipalities, which I am convinced will result in better opportunities for the Island as a tourist destination and economic development”.

The measure is under evaluation by the Senate Culture and Tourism Committee, and the dates for the public hearings will be announced in the coming weeks.