Here’s one for the little guys, particularly the smaller online travel agencies in Hawaii.
For years, they’ve been forced to pay state taxes that the big dogs – like Expedia.com and Orbitz – were exempt from. Why did Uncle Sam let them off the hook? The travel giants claim that because they’re doing business outside of the islands, they shouldn’t be subjected to in-state taxes.
Now, thanks to a recent court ruling, the online companies will have to cough up a huge chunk of change. According to Hawaii News Now, the $146 million I.O.U must be paid in full within 30 days from the ruling, despite the travel companies’ plan to appeal the ruling. Expedia.com has the biggest bill – $60 million, while Travelocity owes $16 million and Orbitz owes $12 million, the report states.
This levels the playing field for all online travel agencies, such as Hawaii Aloha Travel (HAT). The online giants may now be liable for general excise taxes of as much as $25 million. These extra monies could go toward state programs or raises for state employees, so it’s a win-win for everyone.
I was surprised that this exemption hadn’t been reversed years ago. It seemed like quick and easy money for the state, which has been stuck in a budget deficit rut for years now. The report says that investigations of this matter were cut during former Governor Linda Lingle’s administration. This was around the time the state was laying off or furloughing thousands of state workers due to declining tax revenues. Better late than never, I suppose.
More and more, we’re seeing travelers choosing to book through local travel companies. Who could blame them? These are “real people” with top-notch expertise on the vacation destination. Not to mention, they’re always one step ahead of the big dogs. With these inside connections and a welcoming aloha spirit, local travel agencies are able to give customers the best deals possible.
Posted by: Bruce Fisher on Jan 12, 2013