Banning Taxation of Online Hotel Reservations Is Unwarranted and Could Cost States and Localities Billions of Dollars

Source: Michael Mazerov, Center on Budget and Policy Priorities, September 2, 2009

From the summary:
A draft amendment to the Travel Promotion Act of 2009 (S. 1023), which the Senate plans to take up in early September, would ban state and local taxation of hotel room rentals when booked by a travel agent or through an online travel company (OTC) like Expedia or Priceline. In its current form the amendment would immediately deprive states and localities of more than $680 million in annual hotel tax receipts. It would also prevent them from collecting at least an additional $180 million in annual revenue they are potentially owed under current law. Ultimately, it could put at risk states’ and localities’ entire revenue stream from hotel taxes — some $8.5 billion per year. These revenue losses, occurring when state and local governments are experiencing their worst fiscal crisis since the Depression, would likely deepen the cuts they are being forced to make in education, health care, and other vital public services.

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