I write in response to your recent editorial regarding the General Assembly’s expected action on bills vetoed by Gov. Larry Hogan last year (“Picking battles,” Monday). On behalf of Marriott and our hotels in Frederick, I respectfully disagree with your opposition to a veto override on SB 190, concerning the taxation of hotel rooms.
As you recognized, when it comes to sales tax payments there is currently an unlevel playing field between Maryland’s hotels and online travel companies (OTCs) like Expedia and Orbitz. Hotels must collect and remit sales tax based on the retail price paid by customers to book a room. While OTCs charge consumers the same total amount of money, they only remit sales tax based on discounted rates (like wholesale rates) they pay hotels for rooms they book.
OTCs pocket the difference and spend it on marketing that drowns out hotels’ direct outreach to consumers. SB 190 would bring the tax code into the Internet age and ensure all entities booking hotel rooms finally remit sales tax similarly, based on the retail room rates customers pay.
The solution you propose – lowering sales tax paid by hotels – is impossible, as hotels have no wholesale rates to base remittances on. And a general rate reduction would still leave OTCs paying proportionally less than hotels. The field must be leveled.
Even Hogan acknowledged this is not a tax hike. His words: “The online companies are charging a fee, a tax if you will, and not remitting that to the state. The consumers are already paying the money and [OTCs] are skimming it off the top … I wouldn’t constitute it as a tax increase[.]” (The Daily Record, May 11, 2015).
The objectionable money grab here is by websites currently shortchanging the state, not lawmakers fixing the situation. The Legislature should override this veto.
Thomas J. Maloney
Government affairs, Marriott International