ASTA Warns of 2013 State Tax Threats

cashGrass-roots member support is indispensable to combat a rash of potentially damaging new state tax proposals that challenge travel agents and the American Society of Travel Agents (ASTA), who is leading industry opposition to the tax initiatives.

“Agents are critical to the campaigns to defeat these bills,” said Eben Peck, vice president, government affairs of ASTA, citing current challenges in Virginia, Minnesota and New Mexico and expected threats in Connecticut, Massachusetts and other states.

ASTA has already issued a call to action to ASTA members on the Minnesota case, Peck notes, urging agents in impacted states to band together to oppose harmful taxation and regulation. 

Peck also expands the call to action to include non-ASTA member agents. “Agents are critical to the campaigns to defeat these bills.  This is why our industry has a trade association, frankly, so non-members should consider joining ASTA. We and our dues-paying members need your help,” Peck told Travel Agent.



“We also ask that ASTA members respond to our grassroots calls to action. Agents are going above and beyond in Virginia and Minnesota. Also, as these fights heat up, we will need ASTA members to represent us at state legislative hearings. Mary Peters of Friendly Travel in Alexandria, VA, as an example, did that recently in Richmond, VA.

 “So, if you're not a member, join ASTA. If you are, thank you, and please continue to answer the call to arms," Peck said. 

Addressing the Minnesota case, Peck said that basically, the Governor's budget proposes to cut the state sales tax from 6.8 to 5.5 percent but to "broaden the base" to include services in addition to tangible goods.  

Among the many services he proposes to tax is "travel agent services,” Peck says. “It's early in the process, so we don't know more than that. We have initiated a grassroots campaign where Minnesota agents can contact their state legislators and have had a huge response...several hundred emails and counting," Peck noted. 

“The meaning of the policy is that your clients will have to pay more than they do today for any services you perform for them,” Peck noted.

“At this point, we have no detail beyond these three words so we don’t know if this would mean your commissions are taxable, whether this applies to your gross sales or net sales, or anything else. It is safe to say, however, that taxing travel agents services will increase your cost of doing business and put you at a competitive disadvantage with agents and companies in states that aren’t taxed like this,” ASTA’s Peck said.

“At the same time, it would increase the cost of travel to Minnesota and send a profoundly anti-tourism message at a time when the state is competing fiercely with neighboring states for out-of-state tourist dollars,” Peck said.

In Virginia, Peck said there are bills pending to apply the state sales tax (5 percent) to the "gross sales" of "travel services."  

“This would be devastating since so much of agents' gross revenue is "flow through" funds that legally belong to suppliers," Peck said.

“As in Minnesota, we have initiated a grassroots campaign and have had great response from Virginia agencies. None of these bills have advanced, thankfully, but we will remain vigilant during the closing weeks of the legislative session.”

Peck also warns of another tough issue  - the perennial proposals for hotel occupancy taxes.  “These bills, while aimed at the Online Travel Agents (OTA’s), would almost always impact non-OTA agents." He notes that legislation is pending in Virginia and New Mexico and expected in other states.

Still another area of concern to Peck and ASTA’s legislative relations staff – headed by Paul Ruden, senior vice president, legal and industry affairs, is travel insurance deregulation.

Peck notes that ASTA is working closely with the U.S. Travel Insurance Association (UStiA) and has successfully convinced the National Association of Insurance Commissioners (NAIC) and the National Conference of Insurance Legislators (NCOIL) to create a set of state standards for agents to offer travel insurance to their clients. 

This, Peck notes, will replace the outdated, confusing 50-state web of rules that is a regulatory nightmare for agencies to comply with. The standards were put into place in Minnesota, Kentucky, Florida, Kansas and California in 2012, and more states are likely to follow in 2013. 

When the number and diversity of challenges faced by ASTA and its members on the state level are added to those on the federal level, Peck promises a busy year ahead and urges greater agency involvement – both by members and non-members.  

Visit www.asta.org

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