True or False: Although taxes generate revenue for government spending, they can also distort the decisions of consumers and producers. 0 True 0 False 1. Increases in tax agreements between Airbnb and many states Read the foliowr'ng article, which introduces the concept of taxes. Then answer the question that foiiows. Y INCREASES IN TAX AGREEMENTS BETWEEN AIRBNB AND MANY STATES, BY THE APLIA ECONOMICS CONTENT TEAM ; Similar to how Uber has disrupted the taxi service market in many cities, Airbnb continues to rival the hotel industry across the world. As of March 2017, Airbnb had 150 million users and over half a million hosts. This home rental business affords travelers an opportunity for unique and personal lodging while also allowing homeowners to collect additional income by renting out empty spaces. Historically, Airbnb rentals were not officially subject to the same tax regulations as the hotel industry. While some hosts have been incorporating tax payments into their prices and subsequently reporting taxes to their state and local municipalities, most have been ignoring the issue since Airbnb had no ofcial tax arrangement, but this landscape has been changing dramatically in recent years. According to an article in News-Press Now (Jennifer Hall, \"Airbnb Starts Paying Taxes in Missouri," February 2, 2018}, as of February 1, 2018, Airbnb will collect state and local taxes on behalf of Missouri households that rent their spaces through Airbnb's website. In fact, Airbnb now has nearly 360 tax agreements in the United States, including arrangements with state and local municipalities. \"The city views this as a good transition for this new type of industry to compete locally at the same level as what existing hotels are being taxed,\" said Clint Thompson, the city of St. Joseph's director of planning and community development. \"The overall benefit to the community is it can help increase the types of projects we can leverage with this new revenue source." Specically, the Missouri Department of Revenue is seeking to collect about 4.2% in state sales tax from Airbnb, which then gets broken down into city sales tax, county sales tax, tourism tax, promotional tourism tax, and local sales tax. with an estimated revenue of approximately $28.9 million in income for Missouri Airbnb hosts in 201?, imposing a tax on this market is clearly expected to be a signicant source of new tax revenue. In general, taxation is a convenient way of funding government spending and can be used to achieve goals beyond simply raising revenues. However, taxes can distort consumption and production decisions and oftentimes lead to inefficiency. One way the government tries to minimize the effect of taxes on behavior is by adding small taxes and fees to expensive transactions, such as hotels and airline tickets, in hope that the additional charge will seem trivial enough to individual consumers that they will not change the way they spend. At the same time, these fees can signicantly raise the government's revenue because of the large number of transactions. So will these new taxes collected by Airbnb dramatically affect hosts' decisions to list a space or travelers' preferences to rent through Airbnb? Demand for the service has continually increased over the years, so the hope is that this will have minimal impact on the efciency of this market