Counties and some in the Legislature say that should change because of the tax money that’s being left on the table.
But a bill (which I track using LobbyTools) to clarify that online rooms should result in the same amount of taxes going to state coffers as rooms booked directly stalled in a House committee Wednesday, while a competing bill that would do just the opposite – clarifying the law to say that the higher tax isn’t due, moved forward.
The amount of taxes remitted to the state for an online booked room is lower than the amount sent in for a directly booked room because the online travel booking companies are usually paying taxes on a lower rate. For example, a room that a tourist might pay $99 for may actually be costing something more like $79, with $20 of what the customer is paying going to the online travel booker, for example. Local governments, which say they are missing out on tax collections from tourists, argue that the tax should be due on the total amount that the customer pays, not on the lower amount that the hotel actually charged for the room.
But the online travel industry argues that the portion that goes to Expedia, Orbitz, Travelocity or any other online travel booker is a service fee and therefore not subject to tax. Most services in Florida aren’t taxed, including services provided by travel agents – which is what the online booking companies say their work is akin to.
Both sides seem to agree that the law as written is largely unclear on the matter, having been written before online bookings were a common way many people get hotel rooms.
Rep. Janet Long is sponsoring legislation that would spell out that the higher amount should be remitted, while Rep. Jimmy Patronis has a bill spelling out that the service part of the fee isn’t taxable.
Long’s bill (HB 335, which I track using LobbyTools) ran into some stiff opposition on the House Finance and Tax Committee Wednesday – to the point it wasn’t clear whether it was going to pass – and she asked to postpone consideration of the measure. Patronis’ bill (HB 1241), meanwhile, was approved 8-3 Wednesday by the House Economic Development Committee and next goes to the Finance and Tax Committee – which could at its next meeting vote on both bills.
Long tried to assure the panel that the bill doesn’t represent a new tax, but met with skepticism from members whose questions made it clear they believed the bill essentially establishes a tax on a service. Long said the state and local governments are leaving millions uncollected, and that passing her bill could bring more than $30 million into the state general revenue account.
“This is not a new tax,” Long said. “This is a collection and enforcement issue.” Full story here.