Travel Execs Hope For Veto After Maryland Pols Vote to Tax Agent Fees
PHOTO: The state capitol building in Annapolis, Md.
Letting no grass grow under its feet, ASTA pressed Maryland Governor Larry Hogan to veto a hotel bill passed by the state’s House of Delegates that will apply a 6 percent taxes to travel agent fees.
The bill, which was passed on April 8 by a vote of 84 to 56, won Senate approval on March 24.
“ASTA is disappointed by the Maryland House’s passage of SB 190/HB 1065, which would apply new taxes to the services travel agents provide to their clients,” said Zane Kerby, ASTA president and CEO. “Despite the rhetoric, this bill clearly gives taxing authorities the ability to go after travel agents of all shapes and sizes, online or offline – including the 226 Maryland agencies that employ more than 1,100 people. We strongly urge Governor Hogan to veto SB 190/HB 1065, which would impose new taxes and red tape on the independent travel distribution channel upon which so many Marylanders rely.”
ASTA asked the governor to consider the financial ramifications of the bill, which it believes will result in Maryland becoming less economically competitive in the eyes of both agents and consumers. “Increasing the cost of doing business for the independent travel distribution system with new taxes and layers of red tape creates a disincentive for agents to spend their time bringing people to Maryland and risks driving travelers to lower-cost states,” Kerby said.
Meanwhile, five amendments to the bill were all rejected, including an amendment by Delegate Kathy Szeliga that proposed that agency service fees were clearly stated to consumer at time of purchase would be exempt from the tax. Szeliga’s amendment was made on the recommendation of Jay Ellenby, ASTA’s treasurer and CEO and president of Safe Harbors Travel in Bel Air, Md., a vociferous opponent of the bill.
Ellenby was part of an ASTA contingent that rallied against the Senate’s passage of the bill on April 3. “This proposed fee would tax income already subject to federal and state income taxes, resulting in triple taxation that would have to be passed on to the consumer,” Ellenby said during the rally.
Going forward, the passage of such bills as SB 190/HB 1065 unquestionably has negative implications for the travel agency industry, which, in the aftermath of 1990s’ commission cuts and caps, has increasingly relied on service fees.
As a case in point, ASTA said in 2012 agents booked $33 billion worth of hotel rooms, ASTA said. Forty-five percent said they charged fees for hotel-only bookings and 42 percent said they charged a fee for an air, hotel and car package.
ASTA contends that agent service fees invariably result in both saving of time and costs to consumers, and should not be subject to taxes.
The Travel Technology Association (TTA) has joined ASTA in opposition of the bill.
The bill's passage comes despite an April 1 protest by Maryland legislators and travel industry leaders from ASTA, TTA and the Business Travel Coalition.
“There are special interests that are pushing this bill and frankly we need to look out for the special interests of the real Marylanders that show up to work everyday, and have to balance a payroll, and they employ people right in our communities," said Maryland General Assembly Minority Leader Nic Kipke at the rally. "So, I’m encouraging the members of the House of Delegates to resist any new taxes or fees. It’s time Maryland has an opportunity to thrive.”
ASTA and TTA executives are hoping that Hogan will veto the bill to uphold his "no new taxes" election pledge.
A similar measure was voted down by both chambers of the Virginia legislature in January.
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