For years, most of Florida's local governments have ignored one of the inequities of the Internet age: Online hotel booking agencies were paying tourism taxes only on the wholesale price they paid for a hotel room, not what their clients paid to actually use the room. Now, desperate for revenue amid dropping property taxes, some governments have moved to the courtroom to push those booking agencies to ante up. But there's a better way proposed by Pinellas County Tax Collector Diane Nelson. State lawmakers need to clean up an ambiguous state law so that the tourism tax is applied equitably, no matter how tourists book their hotel room.
State law gives counties the ability to impose a tourist development tax on the leasing or renting of any short-term residence. Pinellas charges 5 percent and collected a little over $26 million last year. But Nelson's office says the county was shortchanged $1.4 million by online travel companies such as Expedia, Orbitz, Priceline.com and others.
At issue are different interpretations of state law and who must pay tourism taxes. Booking agencies contend that law applies to their wholesale fee to the hotel, not the resell price. Local governments that have headed to court contend the law applies to the price paid by the consumer.
But lawsuits can be pricey and could take years. Similar suits around the country haven't been successful. A legislative fix proposed by Nelson and embraced by state Rep. Janet Long, D-Seminole, makes more sense. Long's bill would clarify the law, making online travel companies responsible for tourism taxes on the entire amount paid by the customer for the room.
The legislation, HB 579, would also provide amnesty for travel companies that failed to calculate tourism taxes this way before the legislation was enacted. It is a reasonable compromise that gives counties the added revenues going forward but acknowledges the imprecision of the law as currently written. That makes financial sense, and it makes Florida tax law fairer.