Equitable Hotel Tax Passes, May A Veto Loom?

Legislation to “level the playing field” on taxes remitted on hotel rooms booked through online travel companies has passed the General Assembly and is now being reviewed for the Governor’s signature. However, some advocacy groups are urging a veto.

SB 190, would impose a State Sales and Use Tax on the full price paid to an online travel website for the cost of a hotel room, not the wholesale rate the travel website pays to a hotel. Debate on this issue has focused on determining the “taxable price” of a hotel room.

As reported by MarylandReporter.com,

The online companies have been paying the state 6% sales tax on the discounted rate they give the hotels, not the full price they charge consumers, who are also charged the same taxes and fees as they would get at the hotel.

The Internet companies keep the difference in price and the tax paid on it.

These companies say that difference is their service fee from the hotel and shouldn’t be taxed.

Supporters of the bill make the analogy to a TV set bought at a big box store. The store pays the wholesale price to the manufacturer or distributor and does not pay sales tax. The store then charges the consumer the retail price and the sales tax based on that full retail price, and the store remits the sales tax to the state.

MACo offered amendments to include local hotel taxes in the scope of the bill, but was unsuccessful.

Grover G. Norquist, President, Americans for Tax Reform, has sent a letter urging Governor Hogan to veto this legislation.

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