Travel agents face still another tax challenge - this time in Saratoga County, New York. The county's Board of Supervisors voted in favor of a proposal that will impose a new tax on the county’s travel and tourism industry and promptly came under fire from Joseph Rubin, president of the Interactive Travel Services Association (ITSA), who testified against the tax increase.
Online travel companies (OTCs) and traditional brick-and-mortar travel agents will now be required to calculate and remit a new tax for the service of aiding hotel bookings to Saratoga, Rubin said.
“We strongly denounce the decision of the Saratoga County Board of Supervisors to pass a new tax on tourism in Saratoga County, which will adversely affect small business hoteliers and other travel-dependent businesses, such as restaurants, tour operators and even the Track, as well as travel agents and online travel companies that operate in Saratoga County," Rubin said.
"This proposal makes absolutely no sense and will harm the vitality of the County’s tourism industry, " Rubin said in a statement."It’s a baffling decision, and the people of Saratoga should be outraged.”
“This proposal was inherently flawed from the beginning, and is premised upon a misunderstanding of how the online travel company business model works. The hotels themselves seek the assistance of the online travel company to assist them in marketing their property to the OTCs customers. Under this model, the traveler pays a service fee to the OTC for providing the service of researching available hotel rooms and facilitating the booking," Rubin explained.
"Thus, while the price displayed to a consumer may often appear similar to the total cost of booking directly through a hotel, the price charged by the travel agent includes services both for the hotel and for consumers, such as convenience, expert advice, and a comparison-shopping platform. These services do not involve operating a hotel room, so OTCs should not be taxed as such,” Rubin said.
“The Board chose to disregard the fact that similar legislation was declared unconstitutional by the New York State Appellate Division, First Department in 2011, and similar proposals have been rejected by courts and state legislatures across the country," Rubin said. "Unfortunately, it looks like Saratoga County will be heading down the same unconstitutional and unworkable path, while grossly wasting taxpayer resources and time.”
“The potential revenues generated from imposing this new tax are so small, they will likely be eclipsed by the cost of administering and collecting the tax proceeds. While Saratoga will see no benefits, its independent hoteliers, who rely heavily on travel agents to help market their properties, will be disproportionately harmed," Rubin said.
“Traditional travel agents and online travel companies heavily promote Saratoga County as a tourist destination to consumers around the world. Unfortunately, it appears some local officials are looking to bite the hand that feeds Saratoga travel and tourism,” Rubin said.
ITSA’s members include: Amadeus, Expedia, Orbitz Worldwide, Priceline, Sabre Holdings, Travelport and Vegas.com.