ASTA Grassroots Campaign Stops Minnesota Tax

cashASTA is praising its Minnesota members for their grassroots efforts in the wake of Governor Mark Dayton’s recent decision to abandon his proposed expansion of the state sales tax to cover service industries, including travel. ASTA reports its members testified at legislative hearings and applied pressure to legislators through phone calls, face-to-face conversations and emails, including over 900 advocacy messages sent through ASTA’s online grassroots site. 

“The expansion of Minnesota’s sales tax to travel agencies would have been devastating to our industry, and in fighting against the proposal, Minnesota ASTA members have set the gold standard for grassroots engagement,” said ASTA President and CEO Zane Kerby. “We applaud both their efforts and Governor Dayton’s decision to drop this proposal from his budget.”

On January 22, Governor Dayton released his Fiscal Year 2014-2015 budget, which would have reduced the state’s sales tax from 6.8 percent to 5.5 percent but “broadened the base” of the tax by including services (as opposed to tangible goods). On February 19, a bill to implement the Governor’s budget was introduced by legislative leaders, under which effective December 31, 2013 the “gross receipts” of all “retail sales” of “services” would become subject to sales tax.

Under this bill, Minnesota travel agencies would have to pay 5.5 percent of their gross sales in tax on an annual basis (in addition to existing federal and state income taxes) – especially burdensome since so much of an average agency’s gross revenue is made up of “flow-through funds” that legally belong to travel suppliers (airlines, cruise lines, etc.). Based on member surveys, ASTA estimated that this proposal would have cost the average Minnesota agency over $300,000 per year.

ASTA said its members played a critical role in the broad-based campaign to defeat this ill-considered scheme, which included 397 people using ASTA’s online grassroots site to send a total of 922 advocacy messages to state legislators. In addition, ASTA members Gloria Stock-Mickelson (President of ASTA’s Upper Midwest Chapter) and Julie Buchanan testified in-person before the House Tax Committee expressing opposition to the idea, and Craig Beal and Neal Kraemer would have done so as well if the clock had not run out. Roger Block of Travel Leaders (and a member of the ASTA Board of Directors) and Fred Bursch of Bursch Travel also played leadership roles in organizing opposition to the Governor’s proposal.

On March 14, Governor Dayton submitted a revised budget to the legislature, which abandoned the idea of a sales tax expansion. However, some state legislators have indicated that the idea is still “on the table,” so the final outcome of this debate will not be known until the legislature finalizes its budget in mid-May, ASTA said.

ASTA has been working against sales tax expansion proposals in Minnesota and other states in close coordination with travel industry allies such as the Travel Technology Association, AAA and the Global Business Travel Association. In doing so, it has empowered travel agencies to engage in the fight, supplying them with a variety of tools to assist them in successfully making their voices heard by state representatives, ASTA said.

“Thanks to the exceptional hard work of ASTA members like Gloria Stock-Mickelson 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,” Kerby said.

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