Internet Taxation
Discriminatory state and local taxation of Internet commerce threatens to strangle a means of doing business that is of growing importance to the lodging industry.
The Internet’s vast presence has profoundly changed the lodging industry’s communications and reservation systems in the first decade of the 21st century. In 2008, 95% of hotels use the Internet to obtain reservation bookings, up from only 9% in 2002.
Lodging industry Websites continue to spring up - from the largest hotel chains to small bed and breakfasts. These sites can be used for a wide variety of purposes, such as to show photographs of properties, describe amenities and rates, and make reservations. In 2008, 95% of hotel properties maintained a Website.
However, this spectacular growth and modern information efficiency in the hospitality industry is threatened by the continued possibility of discriminatory and access taxation of the Internet.
The Internet Tax Freedom Act of 1998 introduced by Sen. Ron Wyden (D-OR) and then-Rep. Christopher Cox (R-CA) placed a three-year moratorium on new or discriminatory taxation of Internet transactions. With the support of AH&LA, this moratorium was extended twice by Congress, which recognized that the Internet provided American business with an enormous growth potential that should not be stifled by unnecessary taxes.
In the 109th Congress, a bill (H.R. 3678) renewing the Internet Tax Freedom Act was signed into law by President Bush on October 31, 2007. This critical piece of legislation renewed the moratorium through 2014.
AH&LA will continue to support a permanent moratorium on discriminatory Internet taxation. In the 110th Congress, bills such as S. 156 and H.R. 743, the Permanent Internet Tax Freedom Act of 2007, were introduced by Sen. Ron Wyden (D-OR) and Rep. Anna Eshoo (D-CA). Unfortunately, both bills have remain mired in committee. The industry will continue to press for this legislation’s enactment in the present Congress and future sessions.
For more information, contact AH&LA Senior Vice President for Governmental Affairs Shawn McBurney at (202) 289-3123, smcburney@ahla.com.
(Updated August 2008)