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Hotel-Motel Tax Revision Debate: An Increase or Closing a Loophole?

The state Senate’s Tax Subcommittee held hearings this week on a proposal to amend Tennessee’s hotel-motel tax law so that the companies take book reservations would be taxed on the fees they collect. A similar proposal failed last legislative session, but is returning under sponsorship of Sen. Doug Overbey and Rep. Art Swann, both Maryville Republicans who contend the measure basically closes a loophole and makes things fair. Critics say it’s a tax increase.
From the Nashville Business Journal report:
Hospitality officials are seeking to amend a hotel tax law and require online travel companies to pay more in taxes, a measure that would add more than $1 million to annual tax revenue.
The Tennessee Hospitality Association argues that online travel companies (OTCs) have a competitive advantage because they pay taxes on a discounted room rate rather than the retail rate.
Following a dismissal of a class-action case in U.S. district court filed by Goodlettsville against Priceline.com in February, the association is seeking to, as they see it, level the playing field by changing the language in the state law.
“It’s extremely unfair,” Greg Adkins, CEO of the association, said Tuesday at Tennessee’s Tax Subcommittee of Senate Finance Ways and Means Committee.
“The OTCs get off 20 percent cheaper than do brick and mortar hotels who actual employ the folks in Tennessee. Marriot.com does the same service, has the same marketing costs.” Officials representing the online travel companies said amending the tax language would be adding a new tax to e-commerce businesses.