Dear Council Member:
Onbehalf of the National Taxpayers Union’s members in the District of Columbia, Iurge you to reject the Payment of Full Hotel Taxes by Online VendorsClarification Act of 2010 (District Council Bill 18-655). This legislationwould impose a new tax on online hotel remarketers, which would threaten theDistrict of Columbia’s important tourism sector. Instead of new taxes, theDistrict should examine its existing programs to find savings.
Contraryto popular belief, remarketers such as Expedia, Orbitz, and Travelocity do notown or operate hotels. Instead, remarketers merely facilitate transactionsbetween the hotels and customers, keeping part of what the customer pays thehotel as a fee, similar to the services provided by travel agents. Becauseremarketers neither possess nor maintain hotel rooms, they are beyond the scopeof hotel occupancy taxes. Furthermore, research by the non-partisan,Washington, D.C.-based Tax Foundation has found no evidence that remarketerscollect and “pocket” hotel taxes from customers.
Aswith remarketer tax schemes elsewhere, the tax that would be imposed byDistrict Council Bill 18-655 threatens the District’s important tourism sector.Further, there are doubts that a remarketers tax will raise the projectedrevenues. Smaller hotels, such as bed-and-breakfasts, use remarketers tocompete against the larger chain hotel operations. A tax on remarketers willdivert bookings, from both large and small operators, to neighboring citiessuch as Arlington, Alexandria, and Bethesda, which will deprive the District ofhotel tax revenue and badly needed economic activity that visitors to our nation’scapital provide. This is not idle speculation; to give just two examples,hotels in Columbus, Georgia and South San Francisco, California lost businessafter their governments imposed a remarketers tax.
Thetime has come for the District Council to stop piling on more taxes, making joblosses worse, and threatening an important part of the local economy to delaythe inevitable necessary reforms to an unsustainable government. Just ashard-working Washingtonians have tightened their belts in the midst of thiseconomic downturn, the Council should confront the tough decisions on spendingrather than raising taxes. That vital process can move forward by rejecting theproposed tax on online hotel remarketers.
Sincerely,
John Stephenson
State GovernmentAffairs Manager