ALEXANDRIA, VA – The American Society of Travel Agents (ASTA) is urging Governor Larry Hogan (R-MD) to stand up for Maryland small businesses by vetoing legislation (SB 190/HB 1065) passed today by the House of Delegates that would impose new taxes on any travel agent in the country who books a hotel room in Maryland and charges a fee for the service. The bill, which passed the House today mainly along party lines by a vote of 84 to 56, was approved by the Maryland Senate on March 24 by a vote of 32 to 15.
“ASTA is disappointed by the Maryland House’s passage of SB 190/HB 1065, which would apply new taxes to the services travel agents provide to their clients,” said ASTA President and CEO Zane Kerby. “Despite the rhetoric, this bill clearly gives taxing authorities the ability to go after travel agents of all shapes and sizes, online or offline – including the 226 Maryland agencies that employ more than 1,100 people. We strongly urge Governor Hogan to veto SB 190/HB 1065, which would impose new taxes and red tape on the independent travel distribution channel upon which so many Marylanders rely.”
“When this bill reaches his desk, the Governor will have to consider whether he wants to voluntarily take a step that will make Maryland less competitive from both the consumer’s and the travel agent’s perspective,” Kerby continued. “Increasing the cost of doing business for the independent travel distribution system with new taxes and layers of red tape creates a disincentive for agents to spend their time bringing people to Maryland and risks driving travelers to lower-cost states.”
According to ASTA’s analysis, under SB 190/HB 1065, any fees travel agents charge their customers for Maryland hotel bookings above the cost of the room itself would be subject to Maryland’s six percent sales tax. The tax would apply regardless of whether or not the agent is based in Maryland. Maryland sales taxes are generally imposed only on “tangible goods” – if the Governor signs this bill into law, hotel facilitation services would join janitorial and security services as one of the few services taxed in Maryland.
This is problematic because as our industry has evolved, travel agents are relying less on commissions from travel suppliers and more on service fees charged to customers. In 2012, a year when travel agents booked $33 billion worth of hotel rooms, 45 percent of agents reported charging a fee for hotel-only bookings and 42 percent charged a fee for an air, hotel and car package. These fees are charged for a service – saving consumers time and money by helping them navigate a marketplace that offers an overwhelming number of options and choices – and ASTA’s long-held position is that this revenue should not be subject to taxes traditionally applied to hotel room stays.
On April 7, during House consideration of SB 190/HB 1065, five amendments were offered on the floor to limit the reach of the tax or otherwise improve the bill. This included an amendment offered by Delegate Kathy Szeliga (R-Baltimore/Harford counties) on the recommendation of her constituent, longtime ASTA member and current Treasurer Jay Ellenby of Safe Harbors Travel in Bel Air, MD, under which agency service fees clearly stated to the consumer at time of purchase would be exempt from the tax. All five amendments were rejected, largely on party-line votes.