ASTA to Texas Legislature: Pandemic is the Worst Possible Time to Tax Travel Agency Services

On behalf of the American Society of Travel Advisors’ (ASTA) 646 Texas member companies, the group’s Executive Vice President for Advocacy, Eben Peck, has sent a statement to the state legislature urging the rejection of House Bill (HB) 2889, which would impose new taxes on travel services.

“Now is the worst possible time to be raising taxes on the travel agency sector. As a result of COVID-19 and the governmental response to it, the agency business has come to an almost complete halt and has remained there since March 2020,” Peck asserted in his statement.

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“According to ASTA member surveys, average travel agency business income was down 82 percent in 2020, as compared to 2019,” he pointed out. “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.”

HB 2889 proposes the application of a six-percent hotel tax to travel agency service fees. While aimed at the big online travel agencies (OTAs), the bill makes no distinction between these online engines and Texas’ brick-and-mortar agencies. “Any fees travel advisors charge their customers for Texas hotel bookings would be subject to state sales and local taxes that they aren’t today,” Peck explained.

“This is problematic because, as our industry has evolved, advisors are charging service fees to their clients while relying to a lesser extent on commissions from travel suppliers,” he continued. “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.”

“The travel agency business model has evolved in recent years, from one based strictly on commissions to one based on service fees as well. A plain reading of the bill text shows that these agencies, the vast majority of whom are small businesses, would be caught up in this legislation. 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.”

ASTA has already launched a grassroots campaign to oppose HB 2889, which will be voted upon in the next few weeks. Texans involved in the travel industry and beyond can head to the campaign’s webpage to lend their support to the fight against additional taxation on travel agencies.

For more information, visit asta.org/advocacy.

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