Friday, July 6, 2012

Tourist tax revenues may take a hit after Judge's ruling

Most online companies like Orbitz or Expedia  pay lower taxes on the wholesale price for hotels rooms but do not tax the retail price to the consumers.  

With the new Orlando Arts Center and Florida Citrus Bowl renovations, Orlando leaders will rely heavily on these revenues to pay for financing. 

Revenues also go toward global marketing of Orlando and for the convention center debt.

A ruling by judge Judge Fred Lauren sides with online booking companies that they can pay the lower tax.

This new way of doing business could cost County leaders millions of dollars in taxes need to pay for upgrades including the $1.75 million for the Citrus Bowl.

State legislators could be emboldened by the ruling to change statutes that cut deeper into bed tax revenues.  State Rep. Jason Brodeur from Sanford indicated that it may be prime time review the entire bed tax statute.

The downside of bed tax is they rely heavily on tourism that is dependent on the economy.  Case in point during the 2008 economic downturn  the bed tax crunch was heavily affected by decrease in tourism as a whole.

Some $1.1 billion in projected bed tax has been pledged by Orlando officials to pay for the performing arts center, Amway Center and the Citrus Bowl.

When the County of Orlando took companies like Expedia to court to settle the lower tax issue, it cost the County some $1.1 million in legal fees.  Was it worth it, when the online company settled for $9 million?

To date lawmakes side with the online company's and any further clarifications from the government could come at a higher cost to Orlando officials.

In the future, existing hoteliers could end up following the online tavel company model further affecting the bed-tax revenues.

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