Proposed tax hike on commissions defeated in Washington state

By Kate Rice
The state of Washington has maintained its tax rate on travel agency commission income, as an effort that would have made the rate five times higher was defeated.

ASTA praised a grassroots campaign waged by ASTA members that helped defeat the proposal. ASTA said members made their case to legislators through phone calls, face-to-face conversations and emails, including more than 280 advocacy messages sent through ASTA’s grassroots website.

Travel agents and tour operators in Washington pay a state business and occupation (B&O) tax rate of 0.275% on parts of their income. The rate applies to agents’ commission income only — everything else is taxed at the general service rate of 1.5%.

The lower rate was put into place in 1975 to reflect that travel agents usually arrange interstate travel – something states are not allowed to directly tax under federal law.

Legislation was included in the Washington House of Representatives’ version of the state budget that would have undone the special rate. However, the final version of the budget, passed by the legislature late last week and signed into law on Sunday, kept the 0.275% rate intact.

ASTA CEO Zane Kerby said the proposed tax increase would have put travel agents at a competitive disadvantage with agents in other states.

Follow Kate Rice on Twitter @krtravelweekly.

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