Debate continues on taxes online travel companies pay

February 20, 2012 by  
Filed under Travel Deals


Are online travel companies paying enough in taxes?

It’s a conflict that continues to cause intense debate in Tallahassee.

Right now, the online travel agencies pay taxes on the wholesale price they paid for the room, instead of what they charge the customer.

Almost 86 million visitors came to Florida in 2011, according to the group Visit Florida, and many of them stayed in hotels.

Thousands used online travel agencies to make reservations, but some people don’t think those online groups are paying enough in taxes.

For example, a hotel could have a room for $100. They can sell that room to one of the online travel agencies groups for $80. The online travel agency is only required to pay taxes on the wholesale price that they paid for the room, as opposed to the price they charge the consumer.

Cocoa Beach Area Hotel and Lodging Association President Tom Williamson said he does not think it is fair.

“The tax should be based on the retail amount that any consumer is paying for that room,” said Williamson.

Others disagree. State Representative John Tobia, R-District 31, said what the online agencies provide is a service and in the state of Florida services are not taxed, in most cases.

“If we were to go about services, it would be an exemption from the norm, so I think it is very important that we treat them the same way we treat attorneys, any other type of business that provides a service. We tax earnings, but we don’t tax the service itself,” said Tobia.

Hotels have the option to sell their unbooked hotel rooms.

“If those Travelocity or Expedia or third party groups don’t have any hotel rooms there whole business model is out,” said Tobia.

He said the hotels do not have to sell the unbooked rooms if they don’t want to.

Williamson said hotels need to use the online travel agencies to stay competitive. He said hotels use them more than others.

Tobia supports legislation that would allow online travel agencies to only pay taxes on the wholesale price they bought the hotel room for and said the legislation “clears up a number of lawsuits, and keeps hotel prices down for people can come and spend a lot of money here in Brevard County and the State of Florida.”

He said these online groups bring people and tourism dollars into the state.

But Williamson believes Brevard County is missing out on hundreds of thousands of dollars and said the state is also taking an unfair hit.

“Statewide, we are talking hundreds of millions of dollars the state is losing because of this arrangement,” said Wiliamson.

“These companies are capturing these funds, they are just not doing their duty and paying it back to the locality or state.”

Lawmakers continue to debate the issue.

Several counties across the state settled lawsuits with the online companies in recent years.

This has also been an issue in other states.

Williamson is hoping to speak in Tallahassee this week when the House of Representatives Finance and Taxes Committee revisits the issue. 

“How could any of our state legislators just allow this money to escape out of our state when it’s already being paid, it’s already being collected, it’s just not being remitted to the locality or the state,” said Williamson.

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