The New York State legislature, which wants to tax travel agents on 120% of the price of their hotel bookings, adjourned last week without acting on revenue-raising bills that would close a $9.4 billion gap in the state’s 2010-11 budget.
The legislature did not set a date to return to take up the revenue portion of the budget bill, after it approved the appropriations contained in the budget. New York Governor David Paterson has vetoed 6,707 line items of the appropriations and has said he would veto taxes on small businesses like the travel agent hotel tax.
Meanwhile, ASTA is saying the travel agent tax is still a live issue, and it is urging the state’s travel agents to continue pressing the legislature to back off from the proposed tax, ASTA vice president of legislative affairs Colin Tooze said.
As TMR reported last week (“NY Eyes Agent Tax on 120% of Hotel Sales”), ASTA calls the tax measure an outrageous piece of legislation whose definitions of “hotel occupancy providers” are too broad and whose terms display a woeful — indeed willful — ignorance of the way travel agencies operate, including the Online Travel Agencies that the tax measure targets. And a broad coalition of companies and organizations that support the New York travel industry are urging the legislature and New York Governor Paterson to remove a new tax on hotel bookings from the proposed budget being considered.
Tooze said, “We believe this issue is still under active consideration. We are urging New York State lawmakers to step back from the brink of this short-sighted decision. We recognize that New York has to make up revenue shortfalls somewhere, but raising taxes on travel is not the solution. This budget should not be balanced on the backs of travel agents.”
The New York legislation is typical of measures proposed in states across the country, Tooze told Travel Market Report.
Indeed, Roger Rickard, partner in REvent, a business travel consultant that teaches advocacy methods to travel industry groups, said that the travel industry has to educate consumers and elected officials on the macro level — as a whole industry and not segment by segment.
A couple of factors are driving the ease with which the industry is taxed, said Rickard. One is that travel has always segmented itself while many other industries advocate for their overall interests under one banner.
Rickard said that travel has always addressed the consumer from its various segments — meetings, business travel, leisure, events, incentive. “The biggest challenge is that we have not agreed to join forces and we haven’t spoken with a clear voice… . We have not connected the dots between all forms of travel,” said Rickard.
Rickard said that the industry must point out to elected officials that travel does not only create low-wage transient jobs, like summer workers at the Grand Canyon, for instance, but rather it creates well-paying jobs for career professionals who vote in their districts and pay taxes.
He added, the industry should also point out that governments can go to the travel well once too often. Raise taxes on travelers too much and they’ll vote with their feet. Rickard points to New York City as an example. Its high hotel taxes in the 1980s and early ‘90s killed the tourism industry there. When Mayor Giuliani cut hotel taxes, the city’s tourism and travel industry boomed and continues to be one of the top domestic and international destinations.
Rickard said he doesn’t think the travel industry is picked on by revenue-seeking legislatures any more than other industries, but rather it needs to be more effective at advocating for its interests by educating and demonstrating to elected officials that it attracts new revenue to local economies that can stimulate growth.
See related story: New Industry Advocacy Endeavor Envisions ‘One Voice’ for Business Travel