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Travel Tech Group Lauds Demise of Local Tourism Tax Shift

Press release from the Travel Technology Association; March 20, 2013:

NASHVILLE, Tenn., March 20, 2013 /PRNewswire/ — Travel Tech: The Travel Technology Association applauds the wisdom of the Tennessee Senate State and Local Government Committee for voting “no” on Senate Bill 212, which would have created new taxes on brick-and-mortar and online travel services. Online travel companies (OTCs), Tennessee travel agents, anti-tax organizations, independent Tennessee hoteliers, business travelers, internet coalitions and other groups were among those who raised concerns about the impact of the proposal.

Tennessee joins a number of other states in the last two years, including Florida, Virginia, Utah, Oregon, Connecticut, Massachusetts and New Mexico that have considered and rejected similar taxes as unworkable and harmful to tourism and job creation. This marks the second consecutive year that the Tennessee Senate has recognized these taxes as bad policy for Tennessee. A federal court in Goodlettsville, TN, also sided with the OTCs in 2012, holding they were already in compliance with Tennessee tax law.

“We hope the bill supporters in Tennessee now recognize that they were led astray by interest groups looking to use public policy as a competitive tactic to impose new taxes on traditional travel agents and OTCs alike,” said Simon Gros , Chairman of Travel Tech. “OTCs and traditional travel agents are in the business of encouraging travel to places like Tennessee, which creates real jobs and real tax revenue.”

The bills would have also imposed major compliance burdens for local businesses in Tennessee. Any Tennessee-based travel agent who used the fee-for-service merchant model for bookings and assembling travel packages would have had to take on the unprecedented responsibility of calculating and remitting the tax owed in multiple taxing jurisdictions. These added compliance costs would have placed particular strain on traditional brick-and-mortar travel agents, who already operate in a business climate marked by extremely low margins.

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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.