Last updated: 08:32 PM ET, Thu July 02 2015

ASTA Key in Squelching Another State Tax Hike on Agents

Travel Agent | American Society of Travel Agents (ASTA) | Claudette Covey | June 18, 2015

ASTA Key in Squelching Another State Tax Hike on Agents

In yet another coup for ASTA, the Washington state legislature will not eradicate a special tax rate of 0.275 percent that pertains to travel agent commission income.

“Thanks to the hard work of Washington ASTA and the National Association of Career Travel Agents (NACTA) members, travel agents in Washington have avoided millions in new taxes, as well as being put at a competitive disadvantage with agents in other states,” said Zane Kerby, ASTA president and CEO. “We applaud both their efforts and the legislature’s decision not to target the travel sector with new taxes.”

Had the proposal to repeal the tax provision met with success, ASTA said it would have cost Washington travel agencies and tour operators more than $14 million over a two-year time frame alone.

The announcement comes on the heels of another recent ASTA victory: the decision by Maryland Governor Larry Hogan to veto a contentious hotel bill that would have applied six percent tax to agent service fees.

ASTA and it members testified at hearings, and made the case to keep the tax rate in place in countless phone calls and face-to-face meetings with legislative decision-makers. In all, ASTA said 200-plus advocacy messages were sent to state policymakers through the Society’s online grassroots site.

Since 1975, Washington travel agents and tour operators have paid a reduced business and occupation (B&O) tax rate of 0.275 percent, which pertains solely to agents’ commission income. All other income is taxed at the general service rate of 1.8 percent.

In a statement, ASTA said the B&O rate was created to “reflect the fact that a large portion of the travel agents arrange for their clients is interstate travel—something states are not allowed to directly tax under federal law.”

Legislation that was included in the Washington House of Representatives’ version of the state budget called for a repeal the rate, which would have forced agent to pay the 1.8 percent rate instead. Earlier this month, House leadership revised the budget proposal to maintain the 0.275 percent tax rate. Neither Washington state Governor Jay Inslee nor Senate leadership have sought to repeal the rate, which ASTA said settles the tax issue – at least through this year.

In addition to crediting Washington agents and NACTA for helping defeat the proposal, ASTA also praised the efforts of Robert Roach of Roche's Travel in Bellevue, Wash. Roche, president of ASTAs Pacific Northwest Chapter, was instrumental in organizing the grassroots campaign.

For its part, ASTA headquarters worked in tandem with its consortia partners, including the Western Association of Travel Agencies, Signature Travel Network, Hickory Global Partners and Travel Leaders Franchise Group, to help educate Washington state lawmakers on how the tax increase would impact travel agencies.

It also worked closely with Gary Smith, executive director of the Washington-based Independent Business Association.

“ASTA has enjoyed a string of advocacy successes this year at the state level, and we couldn’t do it without a strong partnership with chapter leadership and members in the affected states,” Kerby said. “As such, credit for this latest victory is due to Washington ASTA members and all the agents who participated in the grassroots campaign.”


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