The Virginia State Capitol. (Ned Oliver/Virginia Mercury)
To the Mercury:
Midway through 2020, the United Nations announced that in just five short months, the global travel and tourism industry lost more than $320 billion — three times what was lost in 2009 at the height of the financial crisis.
As we look to turn a corner in the pandemic, travel and tourism will be key to jumpstarting Virginia’s economy. Unfortunately, as the state legislature convenes for 2021, Sen. Thomas K. Norment, Jr., R-James City, has proposed a bill that would introduce taxes on travel agents at a time of unprecedented suffering in the travel industry. New taxes on travel are not the answer to Virginia’s economic woes.
And with 239,900 travel and tourism jobs in Virginia, lawmakers have plenty of reasons to oppose new travel taxes.
Travel agents are critical to fostering in-state travel and bringing out of state tourists and their economic activity back to Virginia. New taxes, as proposed in Senate Bill 1398, are shortsighted and counterproductive.
The travel and tourism industry is essential to the United States’ and Virginia’s economy. The U.S. Travel Association estimates that 1 out of 10 American jobs depend on travel and tourism, and it is among the top 10 industries for employment in 49 states and D.C. — ranking 4th in Virginia.
Online travel agents such as Orbitz, Expedia, Priceline, and Travelocity are responsible for booking hundreds of thousands of room nights in Virginia annually, and operate much like Virginia travel agents. They help consumers facilitate a booking and then charge a small travel agent fee for the service. The same applies to short term rental platforms.
Senate Bill 1398 would tax those travel agent fees, making Virginia destinations more expensive for its own citizens traveling in-state and for out-of-state visitors. Further, for Virginia hotels, inns, bed and breakfasts and other lodging establishments that partner with online travel agents, this new tax on agents could make distribution more costly — at a time when the accommodations sector is already suffering.
Americans are ready to travel again. A Vrbo study found that 82 percent of families already have travel plans for 2021. The same study found that 61 percent of families said they are more likely to visit an outdoorsy destination than an urban one — making Virginia’s mountains, lakes, and coast a perfect destination.
New taxes that increase travel costs will deter visitors and make Virginia residents stay home, forcing the state to miss out on recovering some of the $6.2 billion spent by tourists in Virginia prior to the pandemic. This new tax will also put Virginia’s recovery behind other states, and the state will not realize the tax windfall of travel demand when our nation turns the corner on the pandemic and begins to see economic spending approach pre-pandemic levels.
Although this tax increase is aimed at Virginia and online travel agents, its consequences will cause a ripple effect and harm businesses throughout the state. Fewer tourists means less business for restaurants, shops, hotels and attractions that bring tourists to Virginia.
Steve Shur lives in Northern Virginia and is president of the Travel Technology Association, a trade group.
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