The Connecticut and Tennessee general assemblies will not move forward with bills to impose occupancy taxes on the fees charged by travel agents and other intermediaries for hotel bookings made in those states, ASTA said Monday.
The Connecticut bill would have imposed a 15% tax on agents' fees, while the Tennessee bill would have imposed a tax averaging 6% on agents' fees.
ASTA praised its members' grassroots efforts to defeat the bills, and called it part of "ASTA's successful run against anti-travel agent tax provisions at the state level."
"Unfortunately, as state governments come under strong pressure to address budget shortfalls, the travel industry has become a target for anti-competitive taxes that threaten to undermine states' overall tourism industries, as well as their budgets," said ASTA CEO Tony Gonchar, in a statement. "Thanks to the exceptional hard work of ASTA members and our allies at the grassroots level, we have been able to convince legislators not to pursue these proposals, saving local travel agents thousands of dollars in onerous and harmful new taxes."
The Society cited the testimony of Connecticut ASTA member, Jeff Sonenstein, president of Globe Travel Service in Bristol, who told the Joint Committee on Finance, Revenue and Bonding that if he had to pay an additional tax on those fees, "I can tell you with certainty that this would either force me to change the way I run my business or get out of the business of facilitating hotel stays entirely. ...Paying an additional tax of 15% on top of the taxes I already pay would be nothing short of devastating."
ASTA also sent a letter to the Joint Committee, asserting that after paying federal and state taxes on that income, the bill would amount to agents being "taxed a third time." ASTA suggested the bill would have had a negative impact on Connecticut tourism in general.
"Taxing fees collected by travel agents and other intermediaries creates a disincentive for those companies to spend their valuable resources to bring travelers to the state," the letter said. "Travel agents promote travel to Connecticut through marketing partnerships, online advertising and other channels, yet this legislation effectively punishes those companies by establishing a new tax on travel facilitation, meaning fewer filled hotel rooms, and consequently lower tax revenue." Follow Johanna Jainchill on Twitter @jjainchilltw.