It’s no secret that the travel and tourism industry is among the hardest hit industries by the COVID-19 pandemic. Airlines, hotels, car rentals, short term rentals, cruises, tours, and attractions all saw revenue plunge, and, in many cases, operations ceased. Not only have these industries been directly impacted, so too have all of the businesses that benefit from the economic activity generated by travel and tourism. Restaurants, retail, taxis and rideshare, and more have all seen the same devastating impacts of the pandemic. There is, however, optimism that travel and tourism will come back and come back strong.
As the legislative sessions get underway in states across America, we are seeing too many proposals and bills that seek to tax travel and tourism in varying formats. In short, you can’t tax your way out of this economic crisis. Not only are few people traveling right now, and thus not generating any new tax revenue, the notion that raising taxes on accommodations, car rentals and travel agents will somehow replenish state coffers is short-sighted and flawed.
As we have seen in bills now being considered in Virginia, New Hampshire, Illinois, and Montana, to name just a few, raising taxes on travel and tourism, in any capacity, will have the opposite intended effect. When people travel, they spend money. It’s a well-known multiplier effect and the reason every state markets and promotes tourism and conventions and business events. They are economic drivers. States should be looking for ways to prepare for the recovery of travel and tourism, not tax it. Travel Tech’s members stand ready to work with states to help develop a game plan to be ready for the great recovery we are all anxiously anticipating.
