|Photo by Freeimages.com/Juddson Vance|
This week, the Maryland General Assembly is scheduled to vote on overriding Governor Hogan’s veto of S.B.190, the new tax on travel service providers, both online and in the community. The Travel Technology Association, as well as other travel industry groups, have urged opposition to the new tax.
S.B.190 has been categorized as a bill to address a “loophole” that online travel agencies take advantage of to lower their tax burden. The Travel Technology Association argues that:
1. This tax is not a “closing of a loophole”. There is no loophole. Travel agents currently pay all applicable taxes and this has been challenged and upheld in dozens of courts across America. That red-herring argument is used to engender sympathy for special interests looking for an altruistic answer for supporting new taxes on local businesses.
2. S.B.190 will apply the state’s 6 percent sales tax to the service fees charged by local travel agents, tour operators, wedding and event planners, vacation rental managers, AARP, AAA, and other service providers in Maryland. This tax does not just apply to online travel agents and their customers, it will have very real implications for local businesses and taxpayers.
3. This new tax on small businesses will also create a tremendous administrative burden for travel agencies and other small businesses in Maryland. If enacted, travel agencies of all sizes will now be responsible for creating extensive record keeping and administrative functions for collecting and remitting this tax. Compliance will be especially difficult for small business travel agents.
“The Business Travel Coalition (BTC) strongly cautions Maryland lawmakers not to play politics with the state's travel economy by overriding Governor Hogan's veto of SB190,” said Kevin Mitchell, founder of BTC, the business travel advocacy group. “This new tax would be passed on to corporate, university and government travel departments along with significant new costs for legal obligations and accounting complexities, compliance requirements and audits.”
"As with similar bills across the country, this is being described in Annapolis as something that is all about the big online travel agencies (OTAs)," said Zane Kerby, president of the American Society of Travel Agents. "However, the word ‘online’ is nowhere to be found in the legislation. Instead, it clearly gives taxing authorities the ability to go after travel agents of all shapes and sizes, online or offline – including the 226 Maryland agencies that employ more than 1,100 people, according to the U.S. Census."