Travel advisors have mobilized in recent weeks to fight
proposed taxes on travel services in four states, taking the lead in a
grassroots campaign spearheaded by ASTA.
Budget proposals in Connecticut, Utah and Nebraska call for
the taxation of travel services. They are expected to be finalized in June.
Connecticut has proposed a 6.35% sales tax on professional
services, including "travel arrangement."
Utah's proposed tax on "amounts paid or charged for
services" would be 3.1%.
The proposed tax in Nebraska is 6% of "the gross income
received for the services of travel agents and tour operators and for online
travel services."
Proposed legislation in Washington would repeal the state's
preferential business and occupation tax rate of 0.275% on travel agents,
subjecting them instead to a 1.5% tax rate for services; the Society said that
could potentially increase to a rate of 2.5%.
In addition to utilizing ASTA's grassroots portal, which
enables residents of the states to quickly send lawmakers messages opposing the
proposed tax, travel advisors have hit the ground running. They've been busy
meeting with legislators and testifying before finance committees, stating
their case as to why travel services shouldn't be taxed.
"These are the things that really can change the whole
nature of how you do business," said Brian Hollien, president of Morris
Murdock Travel in Salt Lake City. "It is really scary that something this
impactful could potentially happen with or without people speaking up about it."
When the tax was proposed, Hollien immediate began
requesting meetings with every state senator and representative. He also
testified at the House's taxation and revenue committee meeting where the bill
was introduced and formed a coalition of local travel agencies for advisors to
speak on behalf of when meeting with legislators.
Hollien also got other local associations whose members
would be affected, including the influential Utah Technology Council, which
represents 135,000 employees of technology companies. He has been working with
ASTA through all these efforts.
"It sincerely was a grassroots movement by not just the
travel community," he said, "but by the travel community making sure
that all the other service-related companies were aware of this pending
legislation."
The main arguments against the taxes are that advisors
already pay income taxes on their revenue and that they differ from other
service providers since much of their competition comes from out-of-state
companies that would not have to charge taxes on travel services.
"That's a huge inequity and a huge problem for us,"
Hollien said of the latter argument.
On March 15, agents in Connecticut mobilized by ASTA testified
before the House's finance, revenue and bonding committee. Testifying at the
hearing were Valeri French, owner of French's Worldwide Travel in Newington and
the president of ASTA's Southern New England Chapter; Amanda Klimak, president
of Largay Travel in Waterbury; and Isaac Cymrot, vice president of sales and
industry relations at Travel Insured International in Glastonbury.
The committee meeting began at 10:30 a.m. Klimak and Cymrot
testified around 1:30 p.m., and French didn't get called until 7:30 p.m.
"The legislators were pretty engaged, even after all
those hours," French said. "You could tell they were getting
exhausted by the end of the day just like everybody else was, but they were
very patient, and they really stayed to listen to all of their constituents."
Klimak described the day as "a little chaotic" but
said ASTA had prepared them well.
"ASTA takes the time to empower you to speak
intelligently and know the facts so that when they do ask questions, it allows
you to answer them with the facts that are important," she said.
During her testimony, Klimak told legislators that agencies
simply aren't set up to collect and remit sales taxes. If the tax were passed,
it would burden agencies with the cost of additional accounting technology. She
also said the proposed tax would likely drive clients away from Connecticut
agencies, as out-of-state agencies wouldn't carry the cost of sales tax.
"I'm looking at an expense of over $50,000 a year in
additional taxes that we would have to absorb as a company, which means about
one [travel advisor's] salary," she told legislators.
Republican Rep. Christopher Davis questioned the kind of
clients Largay serves, concluding that the cost of a sales tax could make a
significant difference for families, for example, in deciding whether or not
they would take a leisure trip.
Democratic Rep. Jason Rojas said there are some assumptions
that the services proposed to be taxed, including those of travel advisors, are
used solely by the rich, but that that isn't the case.
French was encouraged by the experience. She praised ASTA
for its help, not only in preparing advisors to testify but with the overall
fight against the tax.
"I think that those people, those industries that are
there being the squeaky wheel educating these [legislators] as to how our
businesses work are the ones that are going to see relief from it. I really do,"
she said.
"If nobody came out and spoke against it, it would just
pass. [Lawmakers] need to keep hearing that we're against it, and that we oppose
it."