States and local governments are losing roughly $275 million to $400 million in revenue each year because of loopholes exploited by online travel companies, according to a new report by the Center on Budget and Policy Priorities.
The lost revenue involves the "mark-up" charged by online firms such as Expedia, Orbitz and Priceline. These companies snatch up hotel rooms at wholesale prices and pay taxes on that amount. They then mark them up and sell them to consumers, but fail to pay taxes on that amount.
Online companies have been sued by local governments, including the City of Jacksonville, but legislation currently being weighed by the Legislature, which CBPP calls "profoundly misguided," would cement the loophole, in effect costing the state millions in potential revenue.
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