Tennessee legislature takes another pass on a new travel tax

Tennessee legislature takes another pass on a new travel tax

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.