Travel Tech: TN Tourism, Travel Threatened by New Tax on Travel Services

Press release from The Travel Technology Association; March 8, 2013:

NASHVILLE, TN, March 8, 2013—In a potential blow to Tennessee travel and tourism, state Senator Doug Overbey and state Representatives Art Swann and Steve McDaniel have sponsored legislation that would impose a new tax on travelers who use the services of online travel companies and brick and mortar travel agents.

The legislation would apply state sales taxes and county and local hotel occupancy taxes to the service fees of traditional and online travel agents that facilitate reservations for Tennessee hotel room transactions. The move would raise prices for consumers and jeopardize Tennessee hotels’ ability to provide competitive travel deals.

The new service tax bills, Senate Bill 212 and House Bill 678, directly contradict decisions made in dozens of states and courts nationwide—including a 2012 decision by the U.S. District Court for the Middle District of Tennessee—which in recent years have soundly rejected similar travel service taxes as being inapplicable as OTCs do not operate hotels.

State legislatures across the nation—such as those in Virginia, Florida, Texas, Pennsylvania, Utah, Oregon, Missouri, Connecticut, and Massachusetts—have examined adding new travel taxes in recent years, and have overwhelmingly recognized that application of these unconstitutional taxes immediately makes a state less competitive for travel and tourism.

While aimed at out-of-state visitors, this new tax would equally impact Tennessee residents looking to book their in-state travel through online and traditional travel agents.

“Tennessee officials have been conned by special interest groups into thinking it is good public policy to trade a short-term cash grab for long-term economic stability. Passage of S.B. 212 and H.B. 678 will make Tennessee less competitive for tourism dollars. The sponsors might as well title this bills, ‘The Kentucky Tourism Stimulus Act,’” said Simon Gros, Chairman of Travel Tech: the Travel Technology Association.

About Travel Tech

The Travel Technology Association, or Travel Tech, is the association for online travel companies (OTCs) and global distribution systems (GDSs), and is dedicated to connecting consumers and travel providers, eliminating barriers to travel and protecting consumers. Travel Tech’s members include: Amadeus, Expedia, Orbitz Worldwide, Priceline, Travelocity, Travelport and Vegas.com.