The Travel Tax Trap
Senate Bill 190, the “Travel Tax” was introduced by one of our “favorites”, State Senator Rich Madaleno. When he isn’t busy hurling insults at the the Hogan Family, we know he is a reliable left-wing vote to increase the cost of doing business here in the State of Maryland. This Travel Tax is designed to redefine the nature of how Online Travel Companies (OTC) pay taxes to the state. The OTCs (companies like Orbitz, Priceline, Travelocity, etc) market hotel room inventory from hotels and lodging providers at a reduced rate,making the room availability to the public, at a profit. The OTCs have been paying sales taxes to the state based off of the reduced rate they paid for the room, not at the rate at which the room was resold to the consumer.
The fiscal note also breaks this down as to what it means in practical terms but also, most interestingly, what this would mean fiscally for the state:
The actual effect of the bill cannot be reliably estimated at this time. The bill is intended to clarify current law with regards to the taxable price of hotel room rentals. As such, it would be expected that the amount of sales tax revenues collected would be unchanged. However, because OTCs are not currently paying sales tax using the State’s interpretation of taxable price, the bill would result in a revenue increase.
Americans for Tax Reform has sent a letter to Governor Hogan urging him to veto the bill. In the letter ATR Chairman Grover Norquist correctly notes that “To put it plainly, SB 190 is a continuation of the crony-tax policies of the O’Malley-Brown administration – policies that Maryland voters rejected last November when you defeated Lt. Gov. Brown.” And that’s exactly what it is. Marriott is pushing the Governor to sign this bill at the same time they are threatening a move of their corporate headquarters to Virginia. The Democrats, particularly Montgomery County Democrat Madaleno, are doing the bidding of Marriott and the other, larger hotel chains in an effort to minimally increase tax revenues at the expense of their competition.