Taxing Hotel Room Sales by Online Travel Companies: What Should Be the Appropriate Tax Base?

James Mak ()
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James Mak: UHERO, University of Hawaii at Manoa

No 2012-5R, Working Papers from University of Hawaii Economic Research Organization, University of Hawaii at Manoa

Abstract: This essay examines the current dispute between state and local governments in the U.S. and online travel companies (OTCs) over the appropriate hotel occupancy tax base for online hotel bookings. It addresses the question of what should be the appropriate tax base in designing hotel occupancy tax statutes. It argues that the appropriate tax base should be the full rental prices of the hotel rooms paid by consumers inclusive of online travel company markups and service fees and not the discounted net rates paid by the OTCs to their hotel suppliers.

Keywords: Hotel Occupancy Tax; Online Travel Companies; Merchant Model (search for similar items in EconPapers)
JEL-codes: Q20 Q25 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2012-07, Revised 2012-08
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-tur
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