Maryland Gov. Larry Hogan vetoed legislation that would have
forced travel intermediaries to pay sales tax on the "accommodation
fees" they charge to customers.
The bill sought to extend the state's 6 percent sales
tax to the full price a consumer pays, including rate markups and fees that agencies
collect for their services. The bill was aimed at online travel agencies, but
other intermediaries, including corporate travel management companies, feared
they would be impacted.
As reason for the veto, Hogan cited ongoing litigation from the
state's comptroller about OTAs' tax burden. Hogan encouraged the state's
legislative branch to "respect the long-standing practice of not passing
legislation that would directly affect matters being litigated in a pending
court case.
"As long as the Maryland Tax Court rules in a timely
manner," Hogan wrote in a note accompanying his veto, "the General
Assembly should at that time consider the Court's findings and determine
whether a legislative remedy is necessary."
Bethesda, Md.-based Marriott International, with support
from other major hotel companies, heavily backed the bill. Marriott would
prefer "this money not be kept by the [OTAs] to pad their profit margins
to increase their marketing budgets and their ability to outcompete us in the
booking space," according to testimony from a Marriott rep during a March
hearing.
The Travel Technology Association, whose members include the major OTAs, had lobbied against the bill and praised the veto.