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Tax on Agency Services Stripped Out of Kentucky Tax Reform Bill

May 18, 2022

Advocacy Win Will Save Average Agency $25,000 Per Year

Alexandria, VA - The American Society of Travel Advisors (ASTA) is praising its members for their grassroots efforts in defeating a Kentucky proposal to expand the state's sales taxes to travel agency services, saving agencies there close to $2 million a year collectively in new taxes.

"Expanding Kentucky's six percent sales tax to travel agency services would have been devastating for travel agencies, especially just as they are beginning to recover from the trauma of COVID-19," said Eben Peck, ASTA's Executive Vice President for Advocacy. "We applaud our Kentucky members for answering the call in this fight, and appreciate Kentucky legislators for listening to their constituents and dropping this provision from the tax reform bill."

In March, the Kentucky House of Representatives unveiled and quickly passed House Bill (HB) 8, which among other things would subject 39 different service industries to the Commonwealth's six percent sales tax for the first time, including "travel arrangement and reservation services." While the bill did not make clear how a tax on the "gross receipts" of such services would apply to travel agencies (i.e. service fees, commissions, gross sales including supplier revenue, etc.), ASTA estimated that if narrowly implemented - capturing agency service fees and commissions as opposed to gross sales - it would cost the average Kentucky agency over $25,000 per year in new taxes, threatening additional layoffs and agency closures beyond those already caused by COVID-19.

As the bill went to the Senate on March 4, ASTA launched a grassroots campaign and called on its Kentucky members to contact their state senators in opposition. These efforts bore fruit in late March, when the Senate removed travel agencies (and two others) from the list of newly taxed industries. The amended bill passed the Senate and was vetoed by Gov. Andy Beshear (D-KY) on April 8, but the Governor's veto was overridden five days later and the bill became law.

"The hard work of ASTA members in Kentucky - Lee Thomas of Altour in Louisville in particular - ensures that agencies in the Commonwealth won't be slapped with almost $2 million collectively in new taxes every year," said Peck. "Advocating for travel advisors at all levels of government is a core part of ASTA's mission, and anyone who wants to be part of this unified effort should join ASTA today."

 

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ABOUT ASTA
Rebranded in 2018 as the American Society of Travel Advisors, ASTA is the leading global advocate for travel advisors, the travel industry and the traveling public. Its members represent 80 percent of all travel sold in the United States through the travel agency distribution channel. Together with hundreds of internationally-based members, ASTA’s history of industry advocacy traces back to its founding in 1931 when it launched with the mission to facilitate the business of selling travel through effective representation, shared knowledge and the enhancement of professionalism. For more information about the Society, visit our mission statement. Consumers can connect with an ASTA travel advisor at  TravelSense.org.

 

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American Society of Travel Advisors

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