Travel Agents Help Defeat Texas Tax Bill

A Texas state bill that would have applied new taxes to the fees and markups that travel advisors charge clients has been defeated, as travel agents and the American Society of Travel Advisors (ASTA) completed a successful campaign to educate legislators about the law’s potential impact.

House Bill 3579 was not forwarded to Texas Governor on May 27 when the legislature adjourned. The Texas legislature only sits every two years, so local agencies should be safe until 2021.

“We’re thrilled it got defeated. Any time the government is trying to find new revenue, you get worried when they aim at you. This is great news for agents and our customers,” said Philip Banks, president and co-founder of Legacy Travel, in Plano, Texas. Banks was engaged in ASTA’s letter writing and phone call campaigns.

“ASTA has done a great job of mobilizing members including ASTA consortia members to get their membership’s support and engagement.  Stuart Godwin in particular has always been an great advocate of his agency members and ASTA and this is just another example of his dedication to the industry,” said Chris Dane of Hickory Travel.

ASTA headquarters worked closely with consortia and network partners and with Texas members, such as American Express Travel & Lifestyle Services, Ensemble Travel Group, Frosch Travel, Hickory Global Partners, Leisure Travel Alliance (LTA), Nexion, Signature Travel Network, Travel Leaders Group, and Virtuoso.

“It was a great response from ASTA leadership and agents all over the state. It snowballs when the calls go out from ASTA getting all of us focused on these issues,” said Banks.

More than 1,000 advocacy messages were sent to state legislators through ASTA’s online grassroots portal during the campaign, on top of phone calls, face-to-face conversations and emails.

“Our thanks go to ASTA,” said D. Stuart Godwin III, CTC, president of Austin, Texas-based Leisure Travel Alliance. “ASTA constantly monitors all proposed state and federal legislation that can impact travel advisors, and had they not found this bill and alerted LTA and other Texas agencies, this bill would have waltzed through the pipeline in its original form.”

Said Zane Kerby, ASTA president & CEO: “Thanks to the hard work of Texas ASTA members, travel advisors in Texas and across the country have avoided burdensome new taxes and being put at a competitive disadvantage with agencies in other states. We applaud both their efforts and the legislature’s decision not to move forward with the bill, recognizing that our industry’s business model has shifted from one based strictly on commissions to one based on service fees, as well.”

Agents mobilized to educate legislators
The original intent of the law was to apply a tax mostly to hotel bookings made through online travel agencies. But the way it was written, the bill would have swept up conventional travel agencies and independent agents.

Agents involved in the campaign felt that they were able to educate legislators about the contemporary advisor’s business model, which hopefully will work to the industry’s advantage if a similar bill ever appears again.

On May 9, Texas state Rep. Eddie Lucio introduced an amendment that was adopted as a result of ASTA’s grassroots campaign, after he was contacted by Dennis Acosta, LTA’s director, member sales & service, and LTA’s Vice President Bobby Godwin.

“They didn’t quite understand how the little guy operates and how we get hammered by these laws,” Acosta told Travel Market Report.

The Lucio amendment would have exempted from taxation any agencies earning less than $250,000 in “annual receipts for securing rooms or spaces in hotels for others,” protecting most – but not all – Texas agencies from new taxation.

“We found over the years in Texas, our legislature, both sides, receptive to constituents and small business,” said Stuart Godwin. “They literally got the bill amended ten minutes before it went to the house floor for vote.”

Texas only one of many attempts to tax agents this year
Travel agents have been in the crosshairs of state bills throughout the U.S. this legislative season.

In April, Washington state passed a law that originally would have resulted in a six-fold tax increase (from 0.275% to 1.5%) for agents, at a cost of more than $14 million a year. Although the bill wasn’t entirely defeated, the final version of the law kept the rate for agencies earning less than $250,000 at the 0.275% rate, while the rate for those earning more than $250,000 annually is now 0.9%.

Bills that could impact travel agencies and their clients are still up for consideration in Connecticut and Utah.

“It’s like whack-a-mole,” Legacy Travel’s Banks said. “The thing is, when one state is successful getting a tax imposed on travel agencies, the others in the next state will do it. We have to squash these wherever they pop up.”