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Montana Governor Targets Online Hotel Reservations

by John Stephenson / /

Where are the Priceline Negotiator and his sidekick Big Deal when you need them? Yesterday, the Helena Independent Record reported that Gov. Brian Schweitzer said online travel websites are shortchanging the state on hotel taxes and he wants to go after them for millions of dollars.

USA Today has reported that hotel taxes are on the rise as states grapple with budget deficits, revenue shortfalls, and overspending. Now Schweitzer wants to apply these taxes to the online services such as Priceline, Expedia, and Orbitz that facilitate the transaction of booking a hotel room in Helena, Billings, or the town closest to the state’s new $16 million Elk hunting preserve.

But as the Tax Foundation argued in a report released earlier this year, attempts like Montana’s to tax online travel services amount to a “revenue grab from out-of-staters” that shifts the tax burden from those who vote to those who cannot. Moreover, they impede interstate commerce. Hotel taxes are levied for occupying a hotel room and enjoying the services of staying in that location. Online travel services don’t provide the room; they only connect the visitor to the hotel who provides the room to occupy. Thus, the online services are not meant to be subject to the hotel tax.

Schweitzer and Montana would be better off if they kept tax rates low to attract visitors and businesses rather than simply go after out-of-staters with no say on the matter. Otherwise, potential visitors will rely on the Priceline Negotiator and Big Deal to find savings staying somewhere else.