Maryland Governor vetoes hotel tax bill

ALEXANDRIA, VA – After a vigorous campaign waged by the American Society of Travel Agents (ASTA) against legislation that would impose a 6% sales tax on travel agency fees for booking Maryland hotel rooms, Maryland Governor Larry Hogan has vetoed the bill. ASTA members played a critical role in defeating Senate Bill (SB) 190, including testifying at hearings and making their case through phone calls, face-to-face conversations and emails, including almost 350 advocacy messages sent to state policymakers through ASTA’s online grassroots site.

“We applaud Governor Hogan for rejecting this bill, which would have made Maryland hotels less competitive, Maryland agencies less profitable, and dis-incentivized the nearly 105,000 agents outside of the state to sell Maryland hotels,” said ASTA President and CEO Zane Kerby. “This win was made possible by a strong partnership between ASTA and other travel distribution stakeholders, but especially through the efforts of our local members such as Jay Ellenby, Karen Dunlap and Larry Swerdlin. Thanks to these actively engaged members—and all the Maryland agents who participated in our grassroots campaign—travel agencies across the country have avoided over $5 million a year in new taxes on Maryland hotel bookings.”

Senate Bill 190 would have applied the state’s 6% sales tax to the service fees and other markups agents charge clients for booking any hotel room in Maryland. ASTA estimates that if implemented as written, the proposal would have cost $81,000 in annual new taxes for Maryland travel agencies, collectively, or over $5 million annually for agencies nationwide.

The bill passed the Senate on March 24 by a vote of 32 to 15. On April 8, after rejecting several amendments to limit the reach of the tax or otherwise improve the bill, including two offered by Del. Kathy Szeliga (R-Baltimore/Harford County), the House passed the bill by a vote of 84 to 56. On May 22, Governor Hogan vetoed the bill, citing pending litigation related to whether or not agencies are required to remit sales taxes in connection with Maryland hotel bookings. The General Assembly may attempt to override the Governor’s veto when it convenes in January 2016.

ASTA members played a critical role in the fight to defeat this ill-considered proposal, including Jay Ellenby of Safe Harbors Travel in Bel Air and current ASTA Treasurer, who testified twice (on February 11 and March 11) before legislative committees expressing opposition to the bill, while Larry Swerdlin of Burton Travel in Owings Mills testified on March 11. On April 1, Karen Dunlap of Travel-On, Ltd. joined Ellenby and ASTA SVP of Government and Industry Affairs Eben Peck at a press conference in front of the state house urging legislators to oppose SB 190. Also, Peck and Kerby met with the Governor’s Chief Legislative Officer Joseph Getty in early April.

ASTA has been working against similar hotel tax expansion proposals across the county in close coordination with travel industry allies such as the Travel Technology Association, including most recently in Virginia, where earlier this year the legislature voted down a bill that would subject the fees charged by “accommodations intermediaries” for facilitating Virginia hotel bookings to both the Commonwealth’s sales tax and local occupancy taxes. In doing so, the Society has empowered travel agencies to make their voices heard by state legislators through legislative updates, talking points and other grassroots resources.

“The hard work of Maryland ASTA members ensures that Maryland travel agencies won’t be slapped with an extra $81,000 collectively in new taxes every year,” said Kerby. “We are grateful both for their efforts and for the Governor and supportive legislators, such as Delegate Szeliga, who agreed that the independent travel distribution system should not be targeted with new taxes and red tape.”