A new bill on its way through the Texas legislature has drawn the ire of the American Society of Travel Advisors (ASTA).
House Bill (HB) 2889, which can be read in full here, would add to the taxes that Texas travel agencies and advisors pay to the state by including travel agent fees in the price of a room or space in a hotel. That would mean that, if passed, starting Oct. 1, 2021, the bill would make it so any fees charged by Texas travel advisors would be subject to state sales and local taxes, which isn’t the case today.
ASTA on Friday said that while HB 2889 may be targeted at online travel agencies (OTAs), it makes no distinction between OTAs and brick-and-mortar agencies, so whatever negative impact it may have would bleed over to its members.
In a statement, ASTA’s Eben Peck said that, with the average agency business down more than 80% in 2020 when compared to 2019, “now is the worst possible time to be raising taxes on the travel agency sector.
“Even factoring in the relief programs created by the federal CARES Act and successor legislation, the average travel agency has laid off close to 60 percent of its staff. Given that context, we question the wisdom of the Texas Legislature considering any form of a tax increase on this decimated industry at this moment in time,” he said.
Over 45% of advisors who booked hotel rooms for clients in 2019 charged a fee, Peck said, and 42% charged a fee for air, hotel, and car package bookings. Those “agencies, the vast majority of whom are small businesses, would be caught up in this legislation” Peck said.
“These fees are charged for a service – saving consumers time and money by helping them navigate a travel marketplace that offers an overwhelming number of options. ASTA’s long-held position is that this revenue, already subject to existing federal and state taxes, should not be taxed a third time through taxes traditionally applied on hotel room stays,” Peck said.
“We would oppose this bill in normal times and oppose it all the more right now, at a time when the travel industry has been brought to its knees by COVID-19. We call on the legislature to reject this measure and instead use the $16.7 billion Texas will get from the federal American Rescue Plan to provide relief for travel-reliant small businesses in the state.”
Advisors who work in Texas and beyond can use ASTA’s Advocacy portal to help fight back against the bill here.