Tourists visiting Oregon generally pay a room tax for the privilege of staying here. The tax varies by community and includes 1 percent for the state. In theory, it is calculated on the cost the lodger pays for the room.
Reality is a bit different, though. If you book your rooms through an online travel agency like Orbitz or Travelocity, you may be paying the full tax but the community collecting it may get something less. That will change if House Bill 2656, which was approved by the full Oregon House of Representatives this week, becomes law. It has yet to be voted on in the Senate.
Online travel agencies generally buy discounted rooms from hotels and motels, then sell them to customers at something close to their full price. The agencies pay transient room taxes on the wholesale price and keep the difference between that and what they actually collected. The state estimates that it, cities and counties in Oregon lose some $3 million in uncollected taxes each year as a result.
HB 2656 would require the online agencies to calculate and pay the transient room tax based not on a room’s wholesale price but its retail one — what a tourist actually pays for the room when it is purchased.
At least some lodging providers are concerned that the proposed change will force them to raise rates, making them less competitive with lodging providers in other states. Yet room taxes have become ubiquitous, or nearly so. They’re collected in Washington, California, Idaho and Nevada, among others.
Meanwhile, the Oregon solution — spelling out specifically that taxes must be paid on the retail price of the room — is a better solution than one in 25 states and the District of Columbia. Lawsuits to recapture back taxes in those states generally have not been successful.
Transient room taxes are designed to ease the burden tourists put on such things as law enforcement and roads. They also go to promote tourism in the state. It makes no sense to let online travel agencies use them as a source of quick and easy cash.