State should close online hotel tax loophole
Posted June 19, 2018 in Press Releases
Policy Matters Ohio supports House Bill 571, which would do so
Legislators should eliminate a loophole in the tax code that provides an unfair advantage for online travel companies and deprives state and local governments of tax revenue they should receive. That was the key point Policy Matters Ohio made today in written testimony to the Ohio House Ways & Means Committee supporting House Bill 571, which would plug that loophole.
When a hotel sells a room, it collects state and local lodging taxes based on the final price –-what the buyer actually paid for the room. Online travel companies, by contrast, pay taxes on only part of the final price. They pay the hotel a discounted rate when booking a room and charge a marked-up price to the buyer. However, these companies typically pay taxes only on the discounted rate they give to hotels, not the final price the buyer pays.
“Requiring online companies to pay taxes on the full price of a room makes sense for Ohio,” said Zach Schiller, Policy Matters research director. “The existing loophole provides additional profits to online travel companies, without providing savings to consumers.”