Lawmakers Consider Hiking "Bed Tax" And Rental Car Tax

Nov 14, 2017

Credit Jackie Yamanaka

Montana Legislators are considering a temporary increase in lodging and car rental taxes to preserve some government services slated to be cut to address Montana’s projected $227 million budget shortfall. It's part of a 3-prong approach sought by Governor Steve Bullock that also includes budget cuts and fund transfers during the special Legislative Session that officially convenes Tuesday.

Senator Dick Barrett is the sponsor of Senate Bill 6. As drafted, the bill would double the lodging tax from 3% to 6% and raise the tax on rental vehicles from 4% to 10%.  The Democrat from Missoula says these taxes were selected by the Bullock Administration in an attempt to lessen the tax impact on Montanans.

"And it does that by first of all imposing a tax largely paid by non-residents, non-resident travelers," he says.

Home health care workers from across the state were among those who lined up before a joint meeting of the House and Senate Taxation Committees to speak in support of SB 6. They say this bill would help keep seniors living independently in their homes. It's projected to raise nearly $21 million in new money. 

Opponents, however, say it is unfair to target lodging and rental vehicles. They say it would hit Montanans  when they travel to sporting events, concerts, and for business. Brad Griffin, president of the Montana Retail Association, says this bill ignores the new and growing on-line economy.

"The new economy has to pay their fair share and that includes Airbnb," he says. "But they absolutely need to be paying their fair share. Likewise with Uber and all the on-line services."

Griffin says the state’s tax system needs to keep up with this shift. 

Credit Jackie Yamanaka

Members of the joint Taxation Committees asked Montana Department of Revenue Director Mike Kadas why the agency isn’t taxing these entities. Kadas says that may come up during this special session.

"In fact the governor did expand the call earlier today to allow us to introduce a bill that would clearly apply the full 7% to on-line travel companies so I am hopeful that would be introduced sometime today," he says.

Other opponents included the Montana Taxpayers Association and the Montana Chamber of Commerce. Some who spoke against the bill said they might support a smaller tax increase levied against lodging and rental vehicles. 

Lawmakers did not take immediate action on Senate Bill 6 Monday and plan to reconvene Tuesday morning. Both the House and Senate are scheduled to convene in full session Tuesday.