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Battle Looms Over New York Travel TaxJuly 6, 2010 By: George Dooley
A New York State tax that could force hotel bookings out of the state and eliminate jobs came under fire from a broad coalition of leading travel companies and organizations. The coalition urged the New York legislature and Governor Paterson to remove a new tax on hotel bookings from the proposed budget being considered.
The new tax would force intermediaries in the travel industry who book hotel rooms to pay an additional 20 percent surcharge on the normal hotel occupancy tax. Those intermediaries include tens of thousands of travel agents, tour operators, business travel planners, and online travel companies who bring visitors to New York. The proposed tax would raise their compliance and business costs dramatically.
“Raising taxes on tourism will only make a bad budget situation worse,” said Steve Powers, owner of Hidden Treasure Tours in Long Beach, NY and president of the Long Island Chapter of the American Society of Travel Agents (ASTA). “This ill-conceived tax will hurt one of our state’s most important industries, reduce the number of visitors, and cut revenue. If passed, it will drive visitors to out-of-state hotels, raise hotel prices, reduce tax revenue from visitors who stay outside the state, create massive red tape and paperwork, and eliminate thousands of good-paying hotel jobs.”
Members of the coalition who are urging reconsideration of the tax include the companies and organizations that bring many of New York’s visitors to the state, including the Interactive Travel Services Association (ITSA), which represents the major online travel companies; the Business Travel Coalition (BTC), representing thousands of business travel managers; and ASTA, representing the nation’s travel agents and agencies.
“This should be called the New Jersey and Connecticut Tourism Promotion Act,” said Art Sackler, executive director of ITSA. “It will create an entirely new tax on nearly every participant in the travel value chain – a tax that will create massive red tape, increase paperwork, damage the state's critical tourism industry, raise hotel prices, reduce the number of visitors, and worsen the impact of the current slump. Let’s not step over dollars to try to collect a few pennies.”
The key concerns for the travel industry cited by ITSA include:
* The tax would apply to nearly every intermediary in the state’s tourism industry. Because of the broad definition of “occupancy provider,” it would apply to the thousands of individual travel agents, tour operators, convention planners, business travel agencies, online travel companies, and package vacation brokers who bring visitors to the state.
* The tax would cost thousands of jobs, ITSA says. Even a marginal reduction in bookings would force financially-strapped hotels to cut more jobs, raising unemployment and further damaging the state’s troubled travel industry.
* It is a nuisance tax that would massively increase paperwork and compliance for little to no revenue benefit. The clerical and compliance requirements of complying with the tax would be a tremendous burned on smaller travel agencies and local businesses that enable hotel bookings.
* The tax would encourage travel intermediaries to book visitors in surrounding areas to avoid the cost and compliance. After a similar tax passed in New York City, 80 percent of tour operators surveyed by a trade association said they planned to reduce their bookings in the city.
* Similar experiments have failed dramatically. After a similar referendum passed in South San Francisco last November that would have applied the city occupancy tax to travel intermediaries, many companies decided to stop doing business in the city. The impact on local hoteliers and businesses was so dramatic that the City Council was forced to immediately rescind the tax, ITSA reports.
* This type of tax has never been successfully applied anywhere in the United States. After considering the potential negative impact, states and municipalities across the country have decided not to damage their important tourism industries through this type of tax.