Letter: Indiana Senators Should Reject New Taxes on Online Travel Agents, Senate Bill 497

To: Indiana Senate Tax and Fiscal Policy Committee
From: Americans for Tax Reform

Reject New Taxes on Online Travel Agents, Senate Bill 497

Dear Senator Holdman and Members of the Senate Tax and Fiscal Policy Committee,

I write on behalf of Americans for Tax Reform and our supporters across Indiana to urge you to reject Senate Bill 497 in light of a new tax on Online Travel Agent (OTA) services that has been added to the legislation.

OTA’s – like Expedia, Travelocity, and others – make it easier for people to book hotels or other accommodations online. They attract travelers to Indiana by offering a variety of lodging options at competitive prices. As such, OTAs are great for restaurants, shops, and other local businesses, as they benefit from tourism.

Applying the sales tax to online travel agent service fees is an expansion of a tax to an area that was not taxed before. This is a violation of the Taxpayer Protection Pledge. Taxes are already collected on the price these agents arrange with a hotel.

Do not be fooled by the interests pushing this tax, it is a tax increase, that will affect anyone who books a hotel stay through a third party, and make the state a more expensive place to visit for tourists.

Proponents may also tout the measure as a way to squeeze more revenue from tourists and other out-of-state visitors, but in reality, this proposed tax hike would also harm Indiana residents. When traveling throughout their home state, they would either be forced to pay more sales taxes when booking through an OTA, or they would have to book directly with the hotel, which is often more expensive.

While this tax hike is guaranteed to increase the state tax burden, often these kinds of taxes fall short of revenue projections. Grabbing for money, rather than reflecting on the state’s outlays may result in more pressure to increase other taxes down the road.

Rather than looking to separate hard-working Indianans from their hard-earned money, and risking losses in tourism-related business, lawmakers can focus on spending more responsibly.

ATR opposes Senate Bill 497 with the addition of taxes on online booking of accommodations, and urges you to vote NO.

Sincerely,

Grover Norquist
President, Americans for Tax Reform