Watchdog: Online travel-booking tax bill gets a 2nd chance

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A tax break for online travel-booking sites sponsored by Rep. Jason Brodeur, R-Sanford and co-sponsored by Rep. John Tobia, R-Melbourne, nearly died after a 11-12 vote of the House Finance and Tax Committee.

But the bill was revived at the last minute by a motion of Rep. Debbie Mayfield, R-Vero Beach (right), to reconsider the bill. And a revised version passed Tuesday.

The bill’s goal is to resolve legal disputes between online travel agencies and local governments over room taxes. It would exempt online travel agencies from paying room-taxes or service fees altogether, putting that responsibility solely on the hotels, motels and other lodgings.

According to a recent bill analysis, the Revenue Estimating Conference estimates that local governments could lose $28.7 million a year if the bill becomes law, but that the magnitude of the loss is hard to determine with so many unresolved legal cases still pending.

The online companies have argued that they shouldn’t have to pay the tax because they act as middle-men to help hotels rent out surplus rooms. Online travel agencies buy the rooms at wholesale rates from the hotel owners, then book them to customers. The customers pay the room-tax when they pay their bill at checkout time.

Counties and cities have argued that they are losing millions in uncollected tax revenue from the online companies for the difference between the wholesale rate they bought the rooms at and the higher rate they sold the rooms to customers.

Brevard County recently settled its case with nine online agencies for $730,000.

The bill has not yet been scheduled for a new hearing.

Apr 6th, 2011 | Posted in Travel
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