Hotel room remarketers ”“ including the likes of Expedia, Priceline and Orbitz ”“ will have to pay up for rooms sold in the Empire State come Sept. 1 when New York collects state sales tax on mark-ups via a new executive budget statute.
Erik Kriss, spokesman for the New York State Division of the Budget said the hotel room remarketers sales tax would raise for the state “$10 million in 2010 to 2011 and $20 million annually thereafter.”
He said the tax is only in effect for seven months of the current fiscal year. “They”™re going to have to pay the 4 percent on markup (when they resell).”
Reports at press time indicated the tax rate would be hinged to the abiding local tax rates.
“Basically, they”™ve decided to amend the definition of a hotel and we think it”™s a bad decision for New York,” said Andrew Weinstein, spokesman for the Washington, D.C.-based trade group Interactive Travel Services Association, which represents online travel agencies like Norwalk, Conn.-based Priceline.com and Orbitz. “It extends the existing occupancy tax to any company or individual who facilitates the booking of hotel rooms. The facilitation fees we”™re charged have never been subject to the occupancy tax in the past and this new law would extend the occupancy tax to those facilitation fees. It”™s a terrible thing for travel and tourism in the state.”
Jan Chesterton, president of the New York State Hospitality and Tourism Association, does not agree.
“The consumer always paid tax due on the room,” she said. “The hotelier is remitting tax on the third party, and there have been explanations that they have been taxed on their service charge.”
She said new legislation could “level the playing field by removing the tax advantage” currently held by online remarketers.
“The tax up to date had not gone back to local jurisdictions and the state and the bottom line is, the consumer pays sales tax,” she said. “Hotels are certainly in favor of forwarding sales tax, but not on what somebody else sold. It goes back to the wholesaler versus the retailer. You wouldn”™t expect the retailer not to pay all the sales tax on what they sold.”
The New York State Senate on Aug. 3 approved the proposed revenue bill, which will increase state revenues by an estimated $1 billion for fiscal year 2011.
