Montana Governor Isn’t a Fan of Tourism


King Schweitzer Hates Tourism

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.

Confused By Laws, Governor Schweitzer Sues Online Travel Companies


Schweitzer and his beloved Jag

Today Governor Schweitzer and the state of Montana sued more than a dozen online travel agencies instead of thanking them for bringing tourists to our struggling state.

According to the MT Department of Revenue, Orbitz, Travelocity, Expedia, and others pay bed taxes on the wholesale portion of the room as opposed to the total amount which includes their fees.  The booking agencies claim that Schweitzer’s interpretation of law is incorrect and that the bed taxes should only be accessed on the amount of money taken in by Montana hotels and that the difference between the total amounts and the wholesale prices is so minuscule that it would produce only $100,000 or so for the state.

Earlier this year,  at Max’s 2010 Economic Development Summit, Schweitzer embarrassed the state by publicly confronting Travelocity leaders over the dispute on the very same day that the group laid out plans to formally promote Montana.

Governor Schweitzer, your big “surplus” shouldn’t be saved by raping an industry that already contributes significantly to Montana’s economy.   Sorry buddy, this time you may have to enact some cuts in state government to make up for the nearly half billion projected budget shortfall.  You may have to stop bragging that you run your state like a ranch and start admitting you are biting the hand that feeds us.