Airbnb and city taxes

At the end of last year I wrote an analysis of the share economy, comparing Airbnb to Amazon in their evolution and relationship to regulation. I have long believed that as soon as Airbnb begins paying hotel taxes in cities across the globe, it will get even harder to shut the startup down. Collecting taxes will legitimize the company, leaving at the de facto leader in vacation sharing.
Well in the last week, Airbnb has made it clear that it intends to be proactive about collecting taxes and assuaging city councils. It will begin immediately collecting the 14 percent hotel tax in San Francisco on behalf of hosts. And in a brash PR move, the company stated publicly that it would be paying $21 million a year in hotel taxes in New York City if it were regulated, legitimized and able to legally collect taxes. (There remains some skepticism about the reality of Airbnb effectively collecting those taxes, at least on the part of some in enforcement agencies.)
Airbnb is smart to want to get the tax situation public, sending the message that the company is happy to play ball as well as reminding city councils that shutting the service down could mean losing tax revenue. Does Airbnb’s entrance into cities mean less tax revenue from hotels? Quite possibly. But if the startup can prove it’ll make up for that lost tax revenue and potentially even promote tourism as it has done with its highlighting of fashionable neighborhoods to visit across the globe on the company site, it leaves itself in a much better position.