<B> Washington Wire</B>
By Barbara Cook, Washington Correspondent
<B>AH&MA-Led Bloc Seeks FF Tax Relief</B>
A coalition of companies and organizations, headed by the American Hotel & Motel Association, resumes meeting this week to find ways to mitigate the effects of the new 7.5 percent tax on the purchase of frequent flyer miles by third-party suppliers for promotional programs.
Tax implementation issues raised by the coalition include multiple taxation of the same miles and the need for renegotiation of existing marketing agreements that were set before the tax was passed in the fall.
The coalition already has sent letters to members of the Senate Finance and House Ways and Means Committees, pointing out its concerns with the taxation provision. John Gay, director of governmental affairs for AH&MA, said that the coalition is considering all options for relief from potential problems and may seek a legislative correction or repeal of the provision.
In a separate development, a number of foreign governments have complained to the State Department about the new tax provision, contending that the United States does not have the authority to tax mileage credits that are redeemed for foreign only travel. Although the new tax went into effect on Oct. 1, 1997, the Treasury Department has not yet released regulations for the precise applicability of the tax.
<a name="story2"><B>DOD Considers Agency Requests To Renegotiate</B>
The Defense Department, in response to concerns expressed by travel agents over their losses in revenue resulting from the airline commission cuts, said it will review agent requests to renegotiate their contracts, which contain guaranteed rebates that run in the range of 3 percent.
Travel agents have argued that they can no longer afford to rebate these sums to the government and pointed out that many of their contracts promising the rebates are up to five years old.
Although earlier requests to DOD to renegotiate travel contracts were unsuccessful, a recent memo from the department's chief acquisition officer J.S. Gansler directed contracting officers to review agent requests and make decisions as quickly as possible.
Gansler said the department must be consistent when evaluating agent requests for relief and he appointed a clearinghouse to coordinate the responses of contracting officers.
<a name="story3"><B>USNTO Submits Funding Plan To Congress</B>
The U.S. National Tourism Organization, created by Congress in 1996 to market inbound travel to the United States, has submitted a mandated report to Congress on long-term financing for the organization.
The law creating the USNTO provided that the organization--which now receives its financing from the the private sector--would sunset if it does not develop and implement a long-term plan to finance its operations by next October.
Private sector funds, meanwhile, should continue to cover all administrative costs of the organization, according to the USNTO report. So far, these costs have been underwritten by the Travel Industry Association.
<a name="story4"><B>Administration May End Amtrak Subsidy</B>
Amtrak, which is without a president and faces a congressional mandate for a new board of directors to be named by March, also may be facing another fight over its federal budget subsidy.
The present board ousted its president, Tom Downs, last month, unhappy with his handling of high-profile labor talks with the company's track maintenance workers. Downs left the company just a week after President Clinton signed a $2.3 billion tax rescue package for Amtrak, including mandates for a new board to be appointed and changes in the rail line's management practices and labor rules.
As the administration prepares its proposed fiscal year 1999 budget, however, there are signals that the President is considering recommending the elimination of Amtrak's operating subsidies next year.
Sen. Frank Lautenberg (D-N.J.) recently sent a letter to President Clinton, which was signed by other key lawmakers from the Northeast, warning that congressional backers of Amtrak will fight any attempt to cut the rail line's subsidy. Amtrak's board also issued a statement urging the continuation of a federal subsidy. Even if the President recommends zeroing out Amtrak, though, the history of presidential budget requests in the past few years demonstrates that, in the final analysis, Congress will set its own spending priorities.