Government is almost devoid of anything that could be called innovation or creative thinking—except when it comes to taxes.
When it is time to book a hotel room, hundreds of thousands of Americans turn to the Internet—to websites such as Travelocity, Orbitz, Hotels.com, among others—to find both numerous options and affordable prices. When customers book a room on one of those sites, they pay for the room, plus the appropriate taxes for that price and location.
The fact that people are usually able to get a good deal through these websites keeps them coming back—and spending money many might not otherwise have spent at all.
But some cities, including San Antonio, Chicago and Rome, Georgia, see this process as unfair because, say they, it robs them of tax revenue. Not the tax revenue that they deserve based on the actual price online travelers are paying for the hotel room. No, they get those taxes.
What upsets these city governments is that they aren’t getting their various hotel-based taxes on the retail amount of the room, rather than the discounted rate. So these governments are suing several Internet-based, travel-oriented companies trying to get that money.
It’s efforts like these that drive the public to ask themselves: Are elected officials completely greedy or just plain stupid?
Just imagine where this argument would take you. You go to a new car dealership eager to buy a new car. You negotiate a significant discount off the list price, but when you look at the papers, you find the dealership is charging you state tax on the list price rather than the negotiated price.
Or you run to the store to pick up several items. You brought some coupons, plus you find a number of sales on the things you want. But when you get to check out you find that the store is charging sales tax on the undiscounted price.
The public wouldn’t stand for that, yet that is what these cities are trying to pull. And they think they can get away with it because the reservations are being purchased online.
When the case was brought before one Philadelphia judge recently, he threw it out of court.
That’s the right move, but we should add as a warning to all of the elected officials pushing these efforts: Ludicrous cases aren’t the only things that can be “thrown out.”