Romney Proposed (Then Backed Away From) Plan To Implement “Internet Tourism Tax” On Users Of Online Travel Booking Sites Like Expedia And Travelocity

In 2005, Romney Backed Away From His Plan To Implement An “Internet Tourism Tax” After Being “Spooked By Even The Suggestion He Might Raise Taxes.”

“Governor Mitt Romney, spooked by even the suggestion he might raise taxes, has backed away from precedent-setting legislation that would have changed the way travelers pay hotel occupancy taxes when they get rooms from companies like Hotels.com, Expedia, and Hotwire. The rationale for the legislation was fairly simple: State and local occupancy taxes should be assessed on the rates consumers actually pay for their hotel rooms. That’s the way it works now only when a traveler buys a room directly from a hotel. When the traveler purchases a room through a third-party website, taxes are assessed on the lower wholesale rate the website paid for the room.”  (Bruce Mohl, “State Backs Off Adjusting Online Occupancy Tax,” The Boston Globe, 2/13/05)

Plan Would Have Raised $12-18 Million In New Taxes.

“[The proposal] would have raised an estimated $12 million to $18 million a year for the state by making consumers who book rooms here through travel websites pay more in state and local hotel occupancy and convention center taxes.” (Bruce Mohl, “State Backs Off Adjusting Online Occupancy Tax,” The Boston Globe, 2/13/05)

Romney’s Proposal “Worried Many Hotel Operators Here Who Feared They Might Get Caught In The Middle.”

“The proposed legislation worried many hotel operators here who feared they might get caught in the middle. The hotels feared the Department of Revenue might come after them for the additional tax money if the online resellers refused to voluntarily pass it along. Hotel operators worried they might have to chase the websites for the money or, worse, collect it from customers at check-in.” (Bruce Mohl, “State Backs Off Adjusting Online Occupancy Tax,” The Boston Globe, 2/13/05)

Boston Herald Called Romney’s Plan “Pennywise And Pound Foolish.”

“Bureaucratic quibbling aside, consumers will be stuck paying higher taxes if a proposed Internet hotel tax becomes law. That sure sounds like a textbook tax increase to us. In a state where tourism is the third biggest industry with an economic impact of some $11 billion a year, it is pennywise and pound foolish to raise taxes on hotel rooms booked through Web sites like Expedia.com or Travelocity .com for the relative pittance of $18 million.” (Editorial, “Hotel Tax ‘Loophole’ Sham,” Boston Herald, 7/9/04)

Romney “Got Cold Feet” And Dropped The Plan To Raise Taxes On Internet Tourism After Opposition From Low-Tax Advocates.

“The state Department of Revenue last year sought to tax all rooms the same way, no matter how they were purchased. The hotel industry blocked the measure, deriding it as an ‘Internet tourism tax.’ The department was ready to try again this year when Romney got cold feet and deleted it from a loophole-closing package. Eric Fehrnstrom, Romney’s communications director, said the governor dropped the initiative for two reasons. First, it failed to pass last year and its chances this year were considered slim. Second, Barbara Anderson, executive director of Citizens for Limited Taxation, objected to it. ‘She thought it was a tax increase,’ Fehrnstrom said.”  (Bruce Mohl, “State Backs Off Adjusting Online Occupancy Tax,” The Boston Globe, 2/13/05)

Romney Proposed And Instituted Sales Tax On Downloading Software

Romney Proposed The New Tax On Downloaded Software.

“A recent proposal by Gov. Mitt Romney to tax software downloaded from the Internet has drawn mixed reactions from legislators and industry organizations.

Consumers must pay a 5 percent sales tax when they buy software in stores, but do not need to pay it when shopping online. The bill would tax programs downloaded from the internet with the state’s standard 5 percent sales tax.” (Andrew Shapira, “Romney To Support A Sales Tax On Downloaded Software,” [Boston University] The Daily Free Press, 4/25/03)

Sales Tax Applied To Downloaded Software For The First Time.

“Software that is delivered to the end user by download will, for the first time, be subject to Massachusetts sales tax starting next month. The same goes for so-called ‘load-and-leave’ delivery, through which a software maker installs the program on your computer. Lawmakers estimate the annual windfall to be somewhere along the lines of $50 million.” (Op-ed, Cosmo Macero Jr., “Download This: No More Free Ride On Net Software Buys,” Boston Herald, 3/7/06)

New Tax Approved “With The Full Support Of Romney.”

“The quiet tax hike was included in a package of ‘loophole’ closing legislation approved last year with the full support of Romney.” (Op-ed, Cosmo Macero Jr., “Download This: No More Free Ride On Net Software Buys,” Boston Herald, 3/7/06)

Software Sales Tax Expected To Impact Businesses The Hardest.

“[A]ccording to Department of Revenue spokesman Tim Connolly, the tax would not significantly affect the average consumer because most of the revenue would come from corporations rather than individuals.” (Andrew Shapira, “Romney To Support A Sales Tax On Downloaded Software,” [Boston University] The Daily Free Press, 4/25/03)

Romney Signed Multistate Pact And Passed Law To Allow For Internet Sales Tax In Massachusetts

Massachusetts Originally Opposed Internet Tax To Be Seen As A “High-Tech Friendly State.”

“To foster a reputation as a high-tech friendly state, Massachusetts took the lead in supporting a congressional moratorium on such taxes, which was extended in 2001 to November of 2003 with the support of President George W. Bush. Where some Main Street businesses saw unfair competition, state leaders saw the almost boundless potential of the Internet to open new markets, and Massachusetts as an incubator for new cyberspace technology.” (Editorial, “Internet Sales Tax Shortsighted Move,” Boston Herald, 3/19/03)

Romney Endorsed Plan That Would End Moratorium On Internet Sales Tax For 35 States, Including Massachusetts.

“Now, Romney has signed onto a plan for Massachusetts to join the Streamlined Sales Tax Project, with more than 35 other states to simplify sales tax rules and ultimately clear the way for all online merchants to collect taxes and return them to the coffers of the proper jurisdiction.” (Editorial, “Internet Sales Tax Shortsighted Move,” Boston Herald, 3/19/03)

Romney Signed Law To Enroll Massachusetts In The Multistate Collaborative.

“A new law signed by Gov. Mitt Romney enrolls Massachusetts in a multistate collaborative looking for a better way for states to collect taxes on Internet sales.” (Steve LeBlanc, “New Law Could Pave Way For Internet Sales Taxes In Massachusetts,” The Associated Press, 3/16/03)

Romney Signed Bill To Help Balance Budget.

“Romney spokeswoman Nicole St. Peter said the governor signed the bill after a suggestion from the legislature. ‘It was part of the budget balancing bill for the fiscal year ‘03,’ St. Peter said.” (Dennis Mayer, “Internet Sales Should Be Taxed, Romney Says,” [Boston University] The Daily Free Press, 4/25/03)

Romney’s Republican Predecessors Both Opposed Internet Sales Tax.

“Former Gov. Paul Cellucci and former acting Gov. Jane Swift both opposed Internet sales taxes. Swift last year vetoed the same bill Romney just signed.” (Steve LeBlanc, “New Law Could Pave Way For Internet Sales Taxes In Massachusetts,” The Associated Press, 3/16/03)