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January 8, 2015

Local Bonus

Lately the state of Virginia has been cutting its support for local services, thereby reducing funding for Virginia’s cities and counties. But a proposal on the table to close an obscure state sales tax loophole would also help patch some of the recent damage to local budgets.

As our new report explains, Governor Terry McAuliffe’s proposal would allow both the state and Virginia’s cash-strapped localities to collect taxes on the full price of hotel rooms booked online, rather than only part of the price. That could result in about $2.75 million a year in additional local transient occupancy tax revenue and another $500,000 a year in local option sales tax revenue.

Almost every one of Virginia’s cities and counties would see at least some benefit.


Closing Virginia’s online hotel bookings loophole is good for the state, good for localities, and good for basic tax fairness. Approving this proposal should be an easy decision for Virginia legislators.

The Commonwealth Institute

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