Travel Tech: Tennessee Travel Industry Threatened By Proposed New Travel Service Tax

NASHVILLE, Tenn., March 8, 2013 /PRNewswire/ -- In an attempt to impose new travel service taxes on Tennessee travel and tourism, state Senator Doug Overbey and state Representatives Art Swann and Steve McDaniel have sponsored legislation to impose new taxes on travelers who use the services of online travel companies and brick and mortar travel agents.

The basis of the new tax is an attempt to 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, raising prices for consumers, and jeopardizing their ability to provide consumers travel deals.

The new service taxes, 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 unconstitutional.

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 supporters of the new tax might argue that it is 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 doing business in Tennessee.

"Local officials have been conned by special interest groups into thinking it is good public policy to try and enact illegal service taxes that will make Tennessee less competitive for tourism dollars. They should title this bill, '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, Sabre Holdings, Travelport and Vegas.com.

SOURCE The Travel Technology Association