Norquist on Texas HB 2889: New Tax Will Make Texas Travel More Expensive, Hit Small Businesses Battered by Pandemic

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Posted by John Kartch on Monday, April 19th, 2021, 10:10 AM PERMALINK

On NewsRadio 740 KTRH today ATR President Grover Norquist sounded the alarm on Texas House Bill 2889:

KTRH host: "Travel industry looking to rebound from Covid -- Texas lawmakers though quietly advanced a bill to tax your use of travel agencies. Grover Norquist with Americans for Tax Reform says that HB 2889 would just be an additional cost passed on to you."

Norquist: "If you go to a hotel and you go through an online travel agency, you'll pay an additional fee. It's a new additional tax that will make it more expensive for people to go to hotels -- and hotels and restaurants have really been hit hard by Covid and the pandemic."

KTRH: "Norquist says Lieutenant Governor Dan Patrick shot down a similar measure last session. He hopes that the Lieutenant Governor will do it again this year."

Click here or below to hear the audio clip.

For years, the Lone Star state has been a shining light for other states, showing that low taxes mean big growth.

One of nine states with no income tax, Texas has led the nation in population growth over the past decade, and become the world’s ninth-largest economy.

So it comes as a surprise that some Texas legislators are advancing a tax hike this session, including the chairman of the House Ways and Means committee.

The tax hike, House Bill 2889, would drive up costs when you go online or call a travel agent to book accommodations. It would apply the hotel tax to the small service fees agents charge, which adds new tax and compliance burdens.

It only gets more confounding when you consider the state, along with local governments, will get around $17 billion from the Biden bailout.

There was some overblown fear of a budget gap, but that gap is turning out to be far smaller than expected, and the state has federal cash lying around which further renders budget gap talk pointless.

It gets even worse when you consider the tax in question, is a tax on tourism.

This picks on a hospitality industry that has been absolutely crushed by the pandemic. Job loss in hospitality in Texas has been worse than any other industry, employment was down 23% from February 2020 to January 2021 (Private Enterprise Research Center at Texas A&M). 

Not to mention, hiking taxes on booking travel would have a negative downstream effect on restaurants, trucking, retail shopping, and more.

Texas legislators should be on high alert, especially Senate Republicans, as the House threatens to moves this tax hike next week.

The good news, over 40 state legislators have signed the Taxpayer Protection Pledge committing to their constituents they will oppose all tax hikes.

The bad news, some of these pledge-signers are flirting with breaking their commitment – just to support an unjustifiable tax hike that picks on the industries most hurt by the pandemic.

Texas taxpayers should get on the phone and make sure their legislators are not falling for the tourism tax hike trap.

 

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