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Pa. Legislators Re-examine Hotel Tax Formulas For Online Booking Sites

(Pennsylvania legislators hold hearing in Philadelphia on how hotel occupancy taxes are charged when a customer buys through an online travel site.  Photo by John Ostapkovich)

(Pennsylvania legislators hold hearing in Philadelphia on how hotel occupancy taxes are charged when a customer buys through an online travel site. Photo by John Ostapkovich)

John Ostapkovich John Ostapkovich
John Ostapkovich brings humor and wit, and a wealth of experience...
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By John Ostapkovich

HARRISBURG, Pa. (CBS) — The Pennsylvania House is looking into closing what some consider a loophole in the way hotel occupancy taxes are collected, allowing online travel companies to keep more of the money.

If you call the hotel for a $100 room and there’s a 10-percent occupancy tax, you’ll pay $110, of which the taxing authority gets $10.

“Only the hotel charge is subject to the taxation, and that’s why folks feel the tax should be applied to the total charge, not only the room itself, but the travel fee that’s assessed by an online service provider,” says state pepresentative Gordon Denlinger (R-Lancaster County, in center of photo, wearing green and black striped tie), who chaired this hearing.

So, in this example, the provider may pay $80 for the room, with a tax of $8, but still charges the customer the same $110.  The difference between the $8 and $10 tax, repeated many times, could equal $5 million a year, proponents of the change say.

Opponents argue that to include the service fee is a new tax — maybe a harmful one.

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