Tax has a disproportionate and outsized impact on travel tech industry
July 24, 2024 – Today, Travel Tech sent a formal letter to Ambassador Katherine Tai, the United States Trade Representative, strongly urging the Biden Administration to take decisive action in response to Canada’s newly implemented digital services tax (DST), given its outsized impact on the travel technology industry.
The Canada digital service tax applies to companies providing digital services, including online marketplaces, with an annual global revenue threshold of at least €750 million and revenue of at least CAD $20 million from digital services provided to Canadian users and does so retroactively to January 2022.
“Our members are at the forefront of digital innovation in travel, connecting consumers with travel service suppliers,” stated Laura Chadwick, President & CEO of Travel Tech. “The unequal impact of Canada’s DST threatens to undermine transparency and distort competition in the travel industry, ultimately harming consumers.”
Travel Tech’s letter details how Canada’s bluntly applied digital services tax on online marketplaces only impacts travel technology industry members but not individual travel service suppliers like hotels and airlines, even though they are selling the same exact rooms and airline tickets.
The letter also addresses Travel Tech’s significant objections to Canada’s methodology of taxing gross revenue rather than net income for digital services. It points out that while digital service companies may earn the same gross revenue, they may have a different cost base resulting in very different margins. For example, even though most of the revenue collected by Online Travel Agents is conveyed to individual travel service suppliers, they will still be responsible for the tax on the full revenue amount.
Travel Tech also expresses its concern about the dangerous precedent of Canada’s digital services tax. Canada’s unilateral action will undermine ongoing international efforts, led by the OECD and G20, to establish a consensus on global digital taxation standards.
“We urge a swift and robust response to Canada’s DST,” Chadwick concluded. “By leveraging USTR’s authority, the United States can advocate for a resolution that upholds fairness, transparency, and the principles of international cooperation in taxation.”
About Travel Tech
The Travel Technology Association (Travel Tech) empowers traveler choice by advocating for public policy that promotes marketplace transparency and competition. Travel Tech represents travel technology innovators ranging from dynamic startups, small, and midsize businesses to leading online travel agencies, metasearch engines, short-term rental platforms, global distribution systems, and travel management companies.
Major Activity Anticipated by Congress, Regulatory Agencies, and State Legislatures in 2024
January 10, 2024 — With Members of Congress returning to Capitol Hill this week, Travel Tech released a briefing on the state of play for public policy impacting the travel industry. As interest in travel continues to rebound with consumers and policymakers, the association is keyed into ongoing legislative and regulatory fights on behalf of travel tech companies.
Advocating for One National Mandatory Fee Price Transparency Law and Enforcement Fairness for Travel Tech Companies
Policymakers on both the federal and state levels continue to pursue efforts to hold hotels accountable when they withhold information about their mandatory fees from travelers. Travel Tech supports a single, national standard and a common-sense provision to account for situations when hotels fail to provide accurate and complete information to price comparison sites.
Action Areas: Federal Trade Commission’s Trade Regulation Rule on Unfair or Deceptive Fees proposed rule (NPRM) (comments due February 7, 2024), S. 2498, the Hotel Transparency Act of 2023, and H.R. 6543, the No Hidden Fees on Extra Expenses for Stays (FEES) Act.
Anticipating Final Rules on Refunds and Ancillary Fee Transparency by the U.S. Department of Transportation (DOT) in February and March
According to the federal government’s Unified Regulatory Agenda, the DOT will issue its final rules on Airline Ticket Refunds and Consumer Protections in February and Enhancing Transparency of Airline Ancillary Service Fees in March of this year. Travel Tech filed comprehensive comments on both proposed rules, as each will majorly impact the travel technology industry.
Action Areas: DOT’s Airline Ticket Refunds and Consumer Protections and Enhancing Transparency of Airline Ancillary Service Fees Notice of Proposed Rulemakings
Securing Travel Tech’s Priorities in the Long-Term Reauthorization of the Federal Aviation Administration (FAA) by Congress
The second extension of the FAA expires on Friday, March 8, 2024. The U.S. Senate Commerce Committee will likely soon schedule a markup of S. 1939, the FAA Reauthorization Act of 2023. In July 2023, the U.S. House of Representatives passed H.R. 3935, the Securing Growth and Robust Leadership in American Aviation Act. Both pieces of legislation include major Travel Tech priorities, and the association continues to advocate actively for provisions included in S.1939.
Action Areas: S. 1939, the FAA Reauthorization Act of 2023 and H.R. 3935, the Securing Growth and Robust Leadership in American Aviation Act
American Innovation and Choice Online Act
Travel Tech supports S.2033, the American Innovation and Choice Online Act (AICOA) to address the vast inequities resulting from extremely large search platforms, like Google, abusing their dominant position and undermining competition.
Action Areas: S.2033, the American Innovation and Choice Online Act (AICOA)
Ensuring the Responsible Use of AI in Travel
Both state and federal policymakers are grappling with how AI tools should be regulated. Given the concerns about inaccurate or outdated information and recommendations, copyright issues, ethical risks and more, the use of AI in travel may soon be a focal point in such discussions. Travel Tech will engage with policymakers on the responsible use of AI in the travel sector.
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The Travel Technology Association (Travel Tech) empowers traveler choice by advocating for public policy that promotes marketplace transparency and competition. Travel Tech represents travel technology innovators ranging from dynamic startups, small, and midsize businesses to leading online travel agencies, metasearch engines, short-term rental platforms, global distribution systems, and travel management companies.
To schedule an interview with a Travel Tech spokesperson, contact Bradford Williamson of Glen Echo Group at 202.870.3234 or bwilliamson@glenechogroup.com.
Tax has a disproportionate and outsized impact on travel tech industry July 24, 2024 – Today, Travel Tech sent a formal letter to Ambassador Katherine Tai, the United States Trade Representative, strongly urging the Biden Administration to take decisive action in response to Canada’s newly implemented digital services tax (DST), given its outsized impact on […]
