Pushed to the back
of the tax-break line
Winging it

Cities gnashing teeth at Gnome's tax tactics

The home of the Alamo, River Walk, the NBA Spurs and the Rose deep within Bob Wills' heart is going after the Roaming Gnome!

Roaming gnome (2) No, San Antonio doesn't want to add the droll little troll to its list of attractions. Rather, city officials are after hotel occupancy taxes they say the gnome's parent company, Travelocity, and 15 other online agencies failed to fully pay.

To get the money, they have filed a lawsuit in federal court.

The suit alleges that Expedia, Travelocity, Orbitz and similar Internet bookers paid taxes on wholesale room rates rather than on the higher retail rates charged actual staying customers. As a result, San Antonio contends it has missed out on around $10 million since 1999.

The South Texas city is the first in the state to take legal action, but it's not alone. Similar lawsuits have been filed by Los Angeles, San Diego, Philadelphia and Atlanta executives.

City attorney Michael Bernard explained it to the San Antonio News-Express this way: If an online agency negotiates a wholesale price of $70 per room, it will charge the consumer $100 and collect taxes based on that retail price. But when the agency remits taxes, it will pay based on the $70 wholesale price.

"The law says the room is taxed on the retail amount," Bernard told the paper. "Taxes across the board in Texas are based on the retail amount."

In that same story, Art Sackler, executive director of the Interactive Travel Services Association, called it all just a misunderstanding about how online travel companies work. The companies don't rent rooms, said Sackler. They simply create a marketplace between buyers and sellers.

"The service fees in question are the companies' attempt to make money as intermediaries and not hotel operators," Sackler said.

San Antonio doesn't care if the companies make money. The city just wants what it sees as its due tax amount.

The city's point of view is understandable. It gets a lot of money from visitors thanks to its 16.75 percent occupancy tax. That rate makes San Antonio's hotel tax the third-highest in the nation, trailing only Houston's 17 percent and Kansas City's 16.99 percent. New York City comes in at number 8 with its 14.81 percent charge to Big Apple hotel guests.

It will be interesting to see who prevails in this tax and/or semantics case. If San Antonio et al do win, it also will be very interesting to see what effect it will have on you, me and other travelers looking for online deals.

Shamu_2_1 Will the online companies nudge conventioneers and tourists toward places with less-taxed accommodations? Or will the kids' cries to visit Sea World and Fiesta Texas win out over cost?

If they lose the lawsuit, will the online travel clearinghouses offer smaller discounts across the board in order to cover the tax costs? Or will only visitors to San Antonio and the other plaintiff cities face slightly higher rates?

Or will a couple of the Internet bookers just gut it up, take the tax hit and keep the discounts the same in order to hold onto and attract customers?

The good news is that the legal action is not likely to affect vacationers this summer. Heck, the way lawsuits drag out, it might not even matter next summer either.

Budget vacation ideas: One way to avoid any hotel occupancy tax anywhere is to camp. If that's just not a realistic option, then look for a hotel/motel room that includes a mini kitchen where you can prepare some of your meals instead of eating every time at restaurants.

These are just two suggestions from The Dollar Stretcher on how to take a break without breaking your bank account. Find the rest of the vacation saving tips here.

Seeing San Antone: We live about two hours north of San Antonio, but haven't yet made it down there. The closest we've come was our early New Year's Eve celebration excursion, recounted here, to Helotes.

When I was a child, my family's most elaborate vacation included a stop in the Alamo City. It was a special trip for a several reasons.

First, it was long, almost two weeks as I recall, as we drove from our West Texas home to visit not only San Antonio, but also Austin and then down to Corpus Christi to see "the ocean."

Secondly, it was one of the few trips that we took that didn't include a stay with relatives. And that leads directly to the third reason why this vacation was extraordinary.

Number three, with no family to mooch off of, we stayed in motels.

I'm not sure where along the vacation trail it was, but I do remember my brother and I simultaneously spotting a billboard for Ramada Inn, as it was called then, offering "luxury for less."

Now my folks didn't raise us cheaply. If they did, we wouldn't have, among other things, taken this particular trip. But they also were wise enough to know that you don't have to waste money, a message my brother and I picked up on. So as soon as we saw the sign, we chanted, "luxury for less, luxury for less!"

The advertising worked, or my dad was ready to stop for the day or he was just ready to stop our yelling, so we stayed that night at Ramada.

And what about the advertisement's promise? Well, this was the first motel I'd ever seen with an in-room coffee maker.

Now that's luxury, 1960s-style!


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Andrew - Money Supply & Debt Blog

I find it ironic that most cities are more than happy to pour billions of dollars into projects in an attempt to bring more visitors to their city, but they would like to snatch a few million from companies that actually make it easier and cheaper for people to visit them!

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