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News & Press: Government Affairs

Indiana could tax travel sites

Wednesday, January 20, 2016  
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By Tony Cook, Indy Star

Travel websites such as Travelocity and Expedia would face higher taxes under a proposal pending before Indiana lawmakers.

Senate Bill 309, introduced by Sen. Brandt Hershman, would require those companies to pay sales and innkeeper’s taxes in Indiana, generating an estimated $18.7 million for state and local governments over the next two years.

Supporters of the measure, including traditional hotels and local tourism officials, say it would make taxes fairer as travelers change how they purchase hotel rooms. Opponents say the bill is essentially a new tax that ultimately would be passed on to consumers.

“It’s a matter of equity between all of the providers of lodging to ensure they are all paying the same rate,” Hershman, R-Buck Creek, chairman of the Tax & Fiscal Policy Committee, said after a hearing on the measure Tuesday.

Under his plan, Indiana taxes would be collected on the service fee that websites charge for online hotel purchases. The proposal would also:

Require sales tax to be collected when construction contractors mark up the cost of materials.
Eliminate a tax break for those who make donations to universities.
Expand a $1,500 state tax deduction to those who have child dependents but are not the child’s parent, stepparent or foster parent.
Overall, the changes would add an estimated $3.7 million to $5.5 million a year to the state’s coffers.

But the issue that garnered the most discussion during Tuesday’s hearing involved online travel websites.

“Today unfortunately there is an unlevel playing field with some of these players in the short-term online arena,” said Patrick Tamm, president of the Indiana Restaurant & Lodging Association, which represents hotels. “We have to pay all our taxes, and we do so willingly. This is simply making sure people pay their appropriate taxes.”

But opponents argue that travel websites are more like travel agencies than hotels.

“This is a new tax in Indiana,” said Steve Shur, president of the Travel Technology Association, whose members include Airbnb, Expedia, Hotwire, Orbits and Priceline. “These taxes will ultimately be passed on to the consumers.”

The Senate Tax & Fiscal Policy Committee plans to take a vote on the issue at a meeting next week.


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