Daily Court Reporter - News Bill aimed to end loophole for online hotel-tax
Bill aimed to end loophole for online hotel-tax
KEITH ARNOLD, Daily Reporter Staff Writer
Awaiting committee referral, a recently introduced piece of legislation meant to eliminate an out-of-state, online travel company's advantage over arguably more conventional means of booking lodging throughout the Buckeye State has drawn praise and ire from divergent constituents.
Westlake Republican Rep. Dave Greenspan's House Bill 571 either levels an uneven playing field for Ohio hotels and motels or is a regressive tax on citizens who are just beginning to feel the benefits of federal tax cuts, depending upon who one believes.
The bill would require online travel companies, such as Expedia, Priceline, Travelocity and Hotels.com, to remit existing taxes that they already collect from consumers.
The move would close an obsolete loophole that proponents of the bill say harms Ohio companies employing tens of thousands of individuals in hotels and hotel-related jobs.
The Ohio Hotel & Lodging Association noted that the practice would also benefit Ohio's travel industry and local communities.
"Ensuring that online travel companies remit taxes they already collect from consumers is fair and just to everyone in the marketplace," association Executive Director Joe Savarise said in a prepared statement. "This is neither a new tax, nor an increase in the tax rate.
"The taxes in question have been applied to hotel rooms for decades. Ohio's hotels already pay these taxes fully, even when those transactions take place on the hotel's own booking website."
HB 571's intent was meant to codify the obvious - that online travel companies operate like any other seller of goods and collect and remit sales tax on the price paid by the consumer.
Savarise's group noted that currently, online travel companies and hotels charge the same amount to consumers for accommodations in a particular hotel property.
The amount of tax remitted to state and local governments, however, is less, allowing online travel companies to keep the difference in amount remitted for themselves.
The left-leaning Americans for Prosperity-Ohio has come out against the measure, arguing that requiring the online travel companies to remit the full amount of the taxes collected amounts to a new tax on Ohio travelers.
"At a time when Ohioans are beginning to feel the benefits of federal tax reform, the last thing they need is to pay a new tax when they book their next family vacation or business trip online," said Americans for Prosperity-Ohio State Director Micah Derry. "It is unnecessary and will put Ohio's tourism economy at a serious disadvantage.
"The new 'Greenspan Tax' is a misguided solution in search of a problem based on the lie that online travel sites are getting a free lunch. This money grab has been rejected by the legislature before and the Greenspan Tax will hit Ohio families as they plan their in-state summer vacations."
The Ohio Hotel & Lodging Association countered the self-proclaimed activist group's assertion with an Expedia memo, dated July 28, 2003, and produced for legal proceedings. The memo stated, "regarding the question of whether we should pass on occupancy tax costs to our customers, the current answer is 'no' - or maybe a more accurate answer is that we do not currently believe that is possible from a competitive standpoint."
Other memoranda identify the loophole as a luxury that won't be around forever, a press release detailed.
The association also pointed to a recent holding by the Supreme Court of Colorado that found online travel companies owed millions in hotel room taxes, having failed to remit the correct amount of lodging tax.
State hotel businesses employ more than 35,000 people directly and support 93,000 hotel-related jobs, the association noted.
These businesses provide 26 million room nights to guests annually and generate $25.5 billion in business sales and support $3.4 billion in taxes.
Lodging taxes provide critical services for both state and local governments, in addition to funding for destination marketing efforts which translates to more economic activity throughout the state.
Date Published: April 27, 2018