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ASTA Member Testifies before Massachusetts Joint Revenue Committee on Hotel Merchant Occupancy Tax

Search ASIA Travel Tips .com Wednesday, 6 June 2007

On Tuesday, ASTA member Jean Deveber with Garber/FCm Travel Solutions, testified before the Commonwealth of Massachusetts Joint Revenue Committee to oppose H. 2866, a bill by Rep. Paul Casey. The legislation would impose a new hotel merchant occupancy tax on services provided by travel intermediaries, require travel agents, as room resellers, to apply for a certificate of registration, and mandate that agents be personally and individually liable to the Commonwealth for failure to pay fees associated with the registration.

Deveber is the manager of corporate sales and service for Garber/FCm Travel Solutions, which is one of largest travel agencies in the United States. In 1983, Deveber was appointed by Gov. Michael Dukakis as his deputy director of scheduling, and she subsequently joined his presidential campaign committee. Deveber is also a former Democratic State Committeewoman and served in this capacity for more than 13 years.

In her testimony, Deveber noted, The hotel merchant occupancy tax measure would have a profound negative impact on the Commonwealth of Massachusetts travel and tourism industry. This new hotel occupancy tax is a tax on services provided by travel agents also known as travel intermediaries, [who] assign a fee at the point of sale that compensates them for their services in booking a reservation and brings a return on investment in employees, websites, software and brick-and-mortar facilities.

The service fee is not part of the charge for renting the hotel room. This fee is already taxed by the federal government and the Commonwealth of Massachusetts. In essence, this new tax proposal means double taxation on an agencys income stream. In reality it threatens hundreds of low-margin traditional agencies of which 98% are small businesses. No other state does this.

This tax will harm tourism, an economic engine of the Commonwealth. It will force intermediaries to rethink the cost of doing business in the Commonwealth of Massachusettsit is Newport, R.I. vs. Cape Cod, Mass. Increasing hotel taxes will deprive the Commonwealth of Massachusetts of the multiplier effect that tourism brings: fewer visitors and conventioneers will mean fewer people taking taxis, dining in restaurants, attending Red Sox games and visiting tourist attractions and shopping establishments.

Tourism is an important part of the Massachusetts economy and on behalf of my colleagues in the industry, I request that this Commission reevaluate the consequences that this new hotel occupancy tax will have on all businesses and oppose its adoption.

According to 2006 year-end figures from the Airlines Reporting Corp., the Massachusetts travel agency community is composed of 491 firms, representing 738 airline-accredited ticketing locations. In 2006, the U.S. Bureau of Labor Statistics reported these Massachusetts firms as employing 2,770 travel agents. Under the U.S. Small Business Administration North American Industry Classification System, 98% of the travel agency industry is made up of small businesses.

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