So what is a glory-hound bully
king governor to do when it appears he will eventually lose his ill-conceived battle? He changes the rules, of course.
Through Governor Schweitzer, Montana is sending quite the message to the more than a dozen online travel booking agencies that he is suing in his quest extract more tax revenue. That message is: “Hey, promote some other state, we don’t like tourism.” Perhaps those companies will treat us like they did Columbus, Georgia. After a court ruled that the online travel companies should indeed be paying more taxes, most major booking agencies simply dropped the city from their listings all together.
In Montana, the difference between the bed tax revenue that is paid and the amount the governor thinks it should be is estimated at a paltry $100,000 annually. One of the agencies targeted by Schweitzer, Travelocity, had just announced a half-million dollar promotion plan for our state when Schweitzer thanked them with a bright, shiny, new lawsuit.
Many jurisdictions across the nation have filed similar lawsuits across the nation and nearly all rulings have favored the travel booking companies. A representative of Expedia said the lawsuits are a question of whether the companies should pay taxes on their margins and fees. Cities and states that levy taxes on the Expedia’s commission lower its incentive for doing business there, he said. Some cities, after failing to win similar lawsuits, have amended their laws and informed hotels that if they cannot force the agencies to pay, they will force the hotels to do so. It is expected that, in the event the cities prevail, the booking agencies will do whatever it takes to recoup the taxes from the hotels.
Claiming that it is just the usual housekeeping, the Montana Department of Revenue plans to publish new rules that apparently recast implementation of the hotel bed tax which clarify the the taxes. The new rules specify that the agencies need to pay tax on the retail amount received from customers, not the wholesale value of the room.
In Montana, the online booking agencies have some help in the ongoing dispute. The Montana Chamber of Commerce and the Montana Taxpayers Association say the Department of Revenue is wrong to use a rule-making process to go after the online companies.
However things play out, it is obvious that these lawsuits will hurt our state’s entire tourism industry. The economic impact will remain to be seen but surely it will be larger than $100,000/annually. And in the event Travelocity and the other number of agencies are victorious, perhaps Governor Schweitzer will send his brother Walt, who has been described as “Helena’s 800-pound gorilla and state government’s elephant in the room” to shake them down.