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Oregon Levels the Playing Field with Online Travel Companies

July 23, 2013 Destination North America No Comments Email Email

The Oregon Legislature recently passed legislation (HB 2656) that clarifies how lodging taxes should be collected across the state, establishing uniformity on collections.

Online Travel Companies (OTCs) have made several misleading claims about this lodging tax bill, asserting that it’s an increase in tax. Oregon Restaurant & Lodging Association (ORLA) and the American Hotel & Lodging Association (AH&LA) have clarified OTC’s assertions with detailed rebuttals, affirming that the legislation only ensures the due tax is remitted.

Online travel companies typically collect the full tax amount from consumers but choose to remit state and local hotel occupancy taxes based on the wholesale cost they pay to a hotel for a room, rather than the retail price they receive from the customer. This practice results in lower taxes collected by state and local jurisdictions for rooms booked through an OTC, rather than directly with hotels or vacation rentals.

OTCs asserted this tax proposal was a “tax increase” on travel agents and amenities such as golf, resort fees, and cleaning deposits. Oregon’s Legislative Counsel clearly stated this bill did not change what items are taxed or the rate of tax; it only ensures that the full tax amount is remitted. This legislation has no impact on hotels, as they have always followed the law and remitted taxes on their retail prices, nor will it affect travel agents as they work on a commission model where the tax remitted is based on the price paid by the guest.

While a large portion of these tax funds go towards tourism promotion efforts, some of the funding assists with infrastructure support for communities that had taxes in place for this purpose before legislative changes were enacted in 2003.

In response nationwide to municipal jurisdictions seeking their fair share of tax revenues, OTCs are pursuing legislation in Congress that would protect their practice by giving them a legitimate tax exemption through a federal preemption of state and local authority. This action would allow them to charge less tax than the hotels and vacation rentals. OTCs currently charge the same total price or more that customers would pay by booking directly with the hotel, even though they are purchasing the room from the hotel at a significant discount.

ORLA and AH&LA outline the OTC assertions on this lodging tax issue with detailed facts refuting the claims at http://bit.ly/ORLA_OTCs.

For more information contact Lori Little, communications manager for Oregon Restaurant & Lodging Association, at 503.682.4422.

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