A travel association is opposing provisions in Ohio’s proposed budget that would apply the state sales and use tax and local hotel occupancy tax to the fees charged by travel agents.
The taxes would apply to agents both online and those throughout Ohio, Stephen Shur, president of the Travel Technology Association, said in prepared testimony.
“This provision represents a new tax on services in Ohio and an expansion of the sales and use tax to services as well as applying local occupancy taxes (typically reserved for hotels) to entities that do not operate hotels in your state,” Shur said. “We urge the committee to reject this new tax on travel agent service fees.”
The TTA online travel agents, including Expedia, Orbitz, Travelocity and Priceline.
The House version of Sub HB 166 proposes to expand the state sales and use tax and local hotel occupancy taxes to services by taxing the service fees that travel agents charge their clients.
“This will not only not generate any significant revenue, it could have a detrimental impact on your travel and tourism economy,” Shur said. “These new taxes on service fees provide a disincentive for travel agents, both online and in Ohio to steer travelers to Ohio destinations.”
According to the TTA, 40 percent of visitors to online travel agent sites do so without a destination in mind.
“Ohio rooms will become more expensive and less competitive with neighboring states,” Shur said. “If enacted, the taxes imposed on OTA fees will be taken into consideration during the next negotiation with Ohio hotels. Like all new taxes, the cost of these new taxes will ultimately be passed on to the consumer in the form of higher cost of the room.”