Most Washington State Travel Advisors Avoid Tax Hike

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In the wake of a campaign waged by the American Society of Travel Advisors (ASTA) and its Washington state members, Washington legislatures have decided to keep in place a reduced tax rate for travel agencies with new allowances for small businesses.

ASTA members played a critical role in opposing a proposal to repeal the special rate, which would have cost Washington travel agencies over $14 million annually. Advisors testified at hearings and made their case through phone calls, face-to-face conversations and emails, including over 600 advocacy messages sent to state policymakers through ASTA’s online grassroots site. The new taxes would have put agencies in Washington at a “competitive disadvantage with agencies in other states,” according to Eben Peck, ASTA executive vice president, advocacy.

“While we would have preferred the tax rate to remain the same for all Washington agencies, we applaud these advocacy efforts and the legislature’s decision not to go through with a six-fold rate increase on Washington travel advisors,” Peck added in a written release.

Since the 1970s travel agents/advisors and tour operators in the State of Washington have paid a reduced state business and occupation (B&O) tax rate of 0.275 percent on their income. The rate was put in place in the 1970s in recognition of the fact that much of the travel advisors arrange for their clients is interstate or international travel – something states are not allowed to directly tax under federal law.

Earlier this year, multiple pieces of legislation were introduced to undo this rate, meaning advisors would pay the general service rate of 1.5 percent. This would be more than six times the current one and would cost agencies an estimated $14.5 million per year in new taxes. After the campaign, including two rounds of in-person committee testimony by ASTA members, legislators made substantial changes to the legislation. The final version, passed on April 28, just before the legislature adjourned for the year, maintains a special B&O rate for travel advisors, but modified such that those agencies earning less than $250,000 annually will remain at the 0.275 percent rate and those earning more than $250,000 annually will pay at 0.9 percent.

Dan Smith of Travel by Dan/Caribbean Adventures, Shawn Van Der Putten of Exquisite Travel Group and Ann Chamberlin, ASTA’s SVP membership and strategic partnerships all testified in committee hearings, while ASTA Greater Seattle Chapter Wendy Denny of Dream Vacations/Pinnacle Cruise and Tour helped to organize the grassroots campaign at the ground level. At the same time, ASTA headquarters worked closely with Washington-based member company Expedia and with consortia partners with Washington members, such as American Express, Hickory Global Partners, Signature Travel Network, TRAVELSAVERS, Virtuoso and WESTA.

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