Thousands of Americans use the Internet to negotiate lower prices for hotel rooms by going to online hotel-booking companies such as Hotels.com and Travelocity.com. It’s just one of many ways shopping on-line has resulted in more choice and lower prices for consumers.
But lower hotel prices than consumers otherwise would have paid has resulted in lower taxes and fees than government otherwise would have collected. And many local governments aren’t taking this perceived loss of revenue lying down.
Local jurisdictions in several states are going to court to force hotel-booking Internet companies to pay the occupancy tax on the perceived full retail value of the room, rather than on the price the consumer actually paid on-line.
How well would this ridiculous assertion work in the brick-and-mortar world?
Suppose you were to find a great back-to school sale on jeans for your kids — only $20, reduced from $25 — but the taxman demands you pay sales tax on the before-discount price of $25.
Or hard times forces your company to reduce your salary from $50,000 to $40,000, but the tax collector demands income tax on your perceived value as an employee at $50K.
Such tax policies would never fly in the brick-and-mortar world, so this is a case of tax policy discrimination against Internet e-commerce.
And the notion that cities are losing money is ludicrous as at least part of what online travel companies do is fill the 40% of rooms that go unoccupied every night, increasing business for hotels and, in turn, increasing revenue to fill the state tax coffers.
So far all of the court cases have been thrown out, which is obviously correct.
But to greedy local officials supporting this technological discrimination, remember: Ludicrous cases aren’t the only things that can be “thrown out” when voters get fed up with never-ending schemes to tax them.