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Economy is clicking: Innovation is faster than government

October 22. 2017 10:35PM

The private sector often moves too fast for government to keep up.

That’s a good thing. We certainly wouldn’t want to slow down businesses by limiting their rate of innovation to the public sector.

But that can lead to gaps that lawmakers never foresaw, such at the peer-to-peer online economy. People trying to make a few bucks on the side run into a state bureaucracy designed to regulate full-time businesses, and struggle to follow the law.

As we reported last week, Airbnb has reached an agreement with New Hampshire’s Department of Revenue Administration to collect the state’s 9 percent Meals and Rooms Tax when users rent rooms in the state.

Hotels shouldn’t be forced to pay a tax that others avoid. But having tax collectors track every online rental was never realistic.

Online connectors such as Airbnb and Uber have been reluctant to become tax collectors for states, since they don’t actually own the hotel rooms and cars being rented. But the large companies are much better suited to handle various state and local laws, and to absorb the costs of compliance.

New Hampshire is in court with a group of online travel companies over the proper amount of tax due to the state.

Agreements, such as the one reached with Airbnb last week, help level the playing field in the emerging online economy.

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