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Published on : Thursday, June 18, 2015
In the wake of a vigorous campaign waged by the American Society of Travel Agents (ASTA) and its Washington state members, the Society is applauding the Washington legislature for its decision to keep in place a special tax rate for travel agent commission income. ASTA members played a critical role in opposing a proposal to repeal the provision, which would have cost Washington travel agencies and tour operators more than $14 million over a two-year period, including testifying at hearings and making their case through phone calls, face-to-face meetings and in more than 200 advocacy messages sent to state policymakers through ASTA’s online grassroots site.
“Thanks to the hard work of Washington ASTA and NACTA members, travel agents in Washington have avoided millions in new taxes, as well as being put at a competitive disadvantage with agents in other states,” said ASTA President and CEO Zane Kerby. “We applaud both their efforts and the legislature’s decision not to target the travel sector with new taxes.”
Since the 1970s, travel agents and tour operators in the State of Washington have paid a reduced state business and occupation (B&O) tax rate of 0.275 percent on parts of their income. This rate applies to agents’ commission income only—everything else is taxed at the general service rate of 1.8 percent. This preferential rate was put into place in 1975 to reflect the fact that a large portion of the travel agents arrange for their clients is interstate travel—something states are not allowed to directly tax under federal law.
Legislation was included in the Washington House of Representatives’ version of the state budget that would undo this special rate, meaning agents would pay the general service rate of 1.8 percent on commission income. This would be more than six times the current rate, and would cost agencies and tour operators an estimated $14.3 million between 2015 and 2017. However, on June 1 the House leadership released an updated budget proposal that would keep the 0.275 rate intact. Neither Governor Jay Inslee nor Senate leadership proposed to repeal the rate, meaning the issue is effectively settled for this year.
Washington travel agents, including members of both ASTA and its sister organization the National Association of Career Travel Agents (NACTA), played a critical part in the fight to defeat this ill-considered scheme. Robert Roach of Roche’s Travel in Bellevue, WA, President of ASTA’s Pacific Northwest Chapter, helped to organize the grassroots campaign at the ground level, while ASTA headquarters worked closely with consortia partners, such as the Western Association of Travel Agencies, Signature Travel Network, Hickory Global Partners and Travel Leaders Franchise Group to educate policymakers about the impact of the tax increase on both large and small agencies. ASTA also wishes to recognize the efforts of Gary Smith of the Washington-based Independent Business Association, who worked to keep ASTA headquarters in the loop as the situation unfolded.
“ASTA has enjoyed a string of advocacy successes this year at the state level, and we couldn’t do it without a strong partnership with chapter leadership and members in the affected states,” said Kerby. “As such, credit for this latest victory is due to Washington ASTA members and all the agents who participated in the grassroots campaign.”
Advocating for travel agents at all levels of government is a core part of ASTA’s mission. Anyone who wants to be a part of that unified effort, or who wants to help support the association that is doing this work daily at the federal and state level, should join today.