How will OTCs benefit from gaining the federal legislation?
The OTCs claim they need the legislation to “standardize” hotel taxes throughout the country because the current system is overly burdensome. However, every hotel already complies with the current system without a problem and they are not even high technology companies like the OTCs, so it’s hard to understand the compelling need to codify the OTCs current business model. In truth, the OTCs would gain a federal tax preference by having their business model of remitting taxes on their discounted rate protected by federal law. Having that special tax preference poses a serious risk to hotels: 1. It would subject them to tax increases as jurisdictions inevitably will look to them to make up the difference in what localities believe are due, and; 2. It would give the OTCs a significant competitive advantage over hotels. This would happen because even though the ROOM price may be the same, the FINAL price charged by OTCs could be less than a hotel’s price since the hotel would always charge
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