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AH&LA Urges Pennsylvania to Enforce Tax Laws Equally

AH&LA Urges Pennsylvania to Enforce Tax Laws Equally

Washington, D.C.—In an effort to push for legislation to protect Pennsylvania hotels from being subjected to higher effective tax rates than out-of-state online travel companies (OTCs), the American Hotel and Lodging Association (AH&LA) will testify at the October 29 field hearing of the Pennsylvania House Committee on Tourism & Recreational Development, convened by Representatives Jerry Stern (R-80) Thaddeus Kirkland (D-159).

Shawn McBurney, AH&LA senior vice president of governmental affairs, will speak before the committee at the hearing, “Online Travel Services.” Members will discuss five bills currently pending review with the committee that would:

  • Amend Title 53 of the Pennsylvania Consolidated Statutes to further provide for excise tax on hotel room rental (HB 871);
  • Amend the Tax Reform Code of 1971 to further provide for definitions (HB 872);
  • Amend the County Code of 1951 to further provide for authorization of certain hotel room rental taxes; and, in grounds and buildings, further provide for certain hotel room rental taxes (HB 873);
  • Amend the Community and Economic Improvement Act of 1998 to further provide for definitions relating to tourism and marketing tax (HB 874); and
  • Amend Title 64 of the Pennsylvania Consolidated Statutes to further provide for hotel room rental tax and the continuation of existing tax (HB 875).

Because rooms booked through hotel channels are subject to taxes on the retail rate but OTCs have exploited the lack of clarity in Pennsylvania’s existing laws, two different types of tax treatment exist for identical transactions. As a result, Pennsylvania hotels are discriminated against with higher effective tax rates and an uneven playing field that gives out-of-state OTCs a tax preference.

“Over the past few years, state and local governments across the country are taking steps to ensure hotels are given a level playing field in their tax rates versus those assessed to out-of-state competitors,” said Katherine Lugar, AH&LA president and CEO. “Here in Philadelphia, actions have been taken to recover revenue from these out-of-state companies that they claim as profit but the city asserted were instead taxes they collected and should have remitted to state coffers. We commend Chairman Stern and Democratic Chair Kirkland for holding this hearing and taking a careful look at the impacts of the OTCs’ controversial practice on the Pennsylvania lodging industry.”

According to 2011 statistics compiled by the Bureau of Economic Analysis, the Pennsylvania lodging industry is responsible for 51,857 jobs and $1.544 billion in wages. As of July 2013, there were 1,392 lodging properties across Pennsylvania, comprised of 132,639 rooms. Smith Travel Research (STR) reports that total room revenue generated by the state’s lodging industry in 2012 was $3.141 billion.

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