SMALL BUSINESS
EFCA
IMMIGRATION
HEALTHCARE
TPA
Estate Tax Reform
Background
The 2001 tax cut package included several provisions designed to increase the value of assets excluded from the estates tax and reduce the estate tax rate. This will culminate in the complete repeal of the estate tax in 2010. However, because of a provision in the law under which the tax cut package was passed, the reforms enacted in 2001 will be repealed in 2011 absent further Congressional action. The estate tax would then revert to its pre-2001 levels: a 55% tax on all estates valued at over $1 million.
Current Status
In the 109th Congress, as in previous Congresses, the Republican House of Representatives passed legislation repealing the “sunset” provision that allows the estate tax to return in 2011, thus ending the “death tax” in all tax years after 2009. However, passing repeal or reform proposals proved more difficult in the Senate.
Republicans attempted to claim victory on this issue in July 2006, by passing a “trifecta” bill that combined permanent estate tax reform (not repeal) with an increase in the minimum wage and other popular tax breaks. However, Democrats in the Senate successfully filibustered the legislation, arguing that the high cost of permanent estate tax reform was insufficient to warrant their support, despite the minimum wage increase and other “sweeteners” in the bill.
Outlook
The Democratic takeover of both the House and Senate in the 110th Congress all but guarantees that permanent estate tax repeal is dead. Democrats have vowed to restore fiscal rules that require all tax cuts to be offset dollar-for-dollar by spending cuts or other tax increases, and the high cost of full repeal – and other pressing priorities for the Democratic majority – makes such an effort highly unlikely.
However, several influential moderate Democrats have previously discussed the concept of a more equitable reform of the estate tax’s effects. Sen. Max Baucus (D-MT) – the incoming Chairman of the powerful Senate Finance Committee – and other rural Democrats have indicated their support for modifications that would exempt more family farms and small businesses from the estate tax. Should Democrats decide to embark on wholesale tax reform – a concept that has been discussed in recent months – the estate tax could play a role in the broader debate.
IHG System Role
IHG will continue to monitor this issue, and work to establish consensus on the damaging effects of the estate tax. IHG’s comments to Sen. Bill Nelson (D-FL) on the way the “death tax” harms small businesses and the tourism industry in his home state of Florida helped prompt him to serve as the lead Democratic co-sponsor of estate tax repeal legislation in the 109th Congress. While the outcome of this issue remains uncertain, we will continue to work with relevant policy-makers to fashion a solution that minimizes the estate tax’s negative economic effects on franchisees.
Privacy
Background
The issue of privacy – how personal data and financial information collected on individual consumers should be stored, secured, and if necessary, shared across networks – continues to draw attention from Congress as well as regulators at the FTC and the Department of Commerce.
Increases in both identity theft and cyber-crime have also fueled a growing consensus that uniform federal standards are needed to protect consumers.
Current Status
Although two House Committees produced competing bills related to privacy, they were not reconciled during the 109th Congress or brought to the House floor. Three bills originated in the Senate Commerce, Judiciary, and Banking Committees.
The prevailing view is that the Democratic majority in the 110th Congress may be more aggressive in producing a measure on which they can seek final action, though the risk may be that they side more with consumer privacy groups that favor more restrictions and/or penalties on business for privacy breaches as well as enforcement by state attorney generals.
In addition to protecting the privacy of personal and financial data collected and maintained by business, we have also been drawn into a larger privacy debate. Consumers, including IHG system customers wishing to use the internet to find data on specific hotels, locations or brands may be subject to identity theft, phishing or even diversion to other websites including porn sites.
Under current rules, IHG and its franchisees can police this system by tracking those who may be fraudulently using a distortion of a Holiday Inn location/name or other brand by tracking the owner of the offending domain name through a registry maintained by the International Corporation of Assigned Names and Numbers (ICANN) which operates the Internet under an agreement with the U.S. Government’s Department of Commerce.
Some privacy activists are attempting to further reduce the data contained on this registry . . . named Whois. . . by shielding it from inquiry and requiring less actual data to be recorded. Some of these activists serve on the Board of ICANN or represent other consumer groups in the EU and elsewhere.
IHG and related hospitality interests . . a frequent target of these abuses . . have been drawn into the fray to organize a broader business response and to insist that the U.S. Government resist any reduction in accuracy or access to the Whois registry.
Outlook
Privacy legislation will be a major focus of the 110th Congress, with the current bills as a starting point. With regard to the ICANN/Whois debate, we will continue to support the technical community (Coalition for On-Line Accountability, others) and to organize appropriate support from the hospitality and lodging industry . . . particularly in having Congressional committees of jurisdiction advise the National Telecommunications Information Administration (NTIA) of the Department of Commerce of the significant importance of their management of the ICANN contract and holding ICANN accountable in this area.
IHG System Role
IHG’s policies and practices in the area of maintenance of personal data and data security have been welcomed on Capitol Hill. We will continue to make this “wise counselor” capability available to the new majority as well as continue our work with the FTC and other regulatory bodies.
The ICANN/Whois debate will mature early in 2007 as a task force reports its finding and recommendations to the ICANN Board, which may call for greater political activity from the system and the hospitality industry generally.
Terrorism Insurance: Extending TRIA’s Protections
Background
The Terrorism Risk Insurance Act (TRIA) was enacted in 2002 because the private insurance marketplace was failing to provide adequate terrorism insurance coverage following 9/11. TRIA was designed to provide a bridge to a time when the private insurance markets would function again regarding this new threat. Following TRIA's enactment, terrorism insurance coverage became readily available, thus enabling billions of dollars of construction and operational transactions previously stalled to go forward. The program requires that the federal government share the risk of loss from terrorist attacks with the insurance industry; and requires that insurers offer terrorism insurance coverage to policyholders on the same terms and conditions as other property and casualty insurance ("make-available provision").
Current Status
The Terrorism Risk Insurance Extension Act (TRIEA), enacted in December 2005, extended TRIA’s provisions through December 31, 2007. The U.S. House of Representatives began to hold hearings this year to explore whether additional federal support is required beyond 2007, and if so, what form it should take. Some have proposed that the U.S. create an insurance pool similar to the program currently in place in the United Kingdom. Others are calling for a TRIA-like federal backstop for conventional attacks, with a separate for chemical, nuclear, biological and radiological attacks in which the federal government assumes financial responsibility initially, subject to repayment via policyholder assessments after the fact. Still others contend that the private market has developed sufficiently to meet terrorism-insurance needs and that the program should simply be allowed to expire.
Outlook
Democratic control of Congress improves the prospects for extension of a federal role in terrorism insurance beyond December 31, 2007. We expect the 110th Congress to explore various approaches ranging from a simple extension of TRIEA to developing a long-term plan to encourage private insurers to return to the market, with a gradual declining of the federal backstop.
IHG System Role
IHG is an active member of the CIAT Steering Committee. CIAT led the effort to enact TRIA in the aftermath of 9/11 and the subsequent enactment of TRIEA last year. It will continue to drive the debate regarding the state of the nation’s terrorism reinsurance markets.
Homeland Security
Background
Unsurprisingly, the Department of Homeland Security remains extensively involved in a variety of issues that directly affect the health and wellbeing of the travel and lodging industry. In the past few months, several key pieces of legislation impacting the industry have passed Congress, which will provide meaningful (if in some cases temporary) relief to the tourism and hospitality industries as the federal government works to obtain a balance between economic growth and domestic security.
Current Status
Homeland Security actions, and accomplishments by the travel and tourism industry in shaping these outcomes, are as follows.
Western Hemisphere Travel Initiative (WHTI) – Passport Requirements for Travel
As a result of Congressional action in September 2006, the Departments of State and Homeland Security revised their proposal requiring visitors to present passports as a condition of entry into the United States. The Departments announced a new phased-in timeline for implementation of this requirement:
- By January 23, 2007, all air and sea travelers arriving from Canada, Mexico, the Caribbean, Bermuda, and South America (including U.S. citizens) will be required to present passports or other secure documents.
- By no later than June 2009, all land travelers from Canada and Mexico will be required to present passports or other secure documents.
The Administration’s actions ensure that holiday travelers will not be unduly affected by the passport requirements when returning to the United States, and effectively postpone the passport requirement at land border crossings by up to 17 months, as this phase-in was originally scheduled to occur in January 2008.
Senior leadership within IHG, along with other industry leaders within the Travel Business Roundtable (TBR), have worked diligently to combat any adverse effects on the tourism industry from this initiative. Specifically, IHG and TBR urged Congress to adopt the amendments to the WHTI deadline, in order to eliminate confusion, prevent any backlog in passport processing, and allow time for the development of a reduced price “passport card” which individuals can use when traveling within North America.
While the language passed by Congress authorized the Departments to postpone full WHTI implementation until June 2009 – and required that a “passport card” option be fully in place before such implementation occurs – the Departments have indicated their desire to accelerate the passport requirement if at all possible. Congress has required the Departments to report at regular intervals on the progress of WHTI implementation, and if the Administration encounters further delays, lawmakers may consider further actions to ensure that the interests of the travel industry are not compromised by any lingering logistical issues.
H-2B Visas for Temporary Workers
As a result of efforts between IHG, IAHI, and related travel industry groups, Congress recently passed a one-year extension of language permitting returning seasonal workers on H-2B visas to return to their employers without counting against annual visa limits. On this issue, we received support from Sen. Lindsey Graham (R-SC), a leading advocate of immigration reform with whom IHG and IAHI met to express the concerns of the tourism industry. IHG Chairman Steve Porter’s articles in several newspapers highlighting the industry’s difficulty in attracting and retaining quality workers – with a particular focus on the H-2B extension – also helped build momentum toward an extension.
We remain mindful that the extension passed by Congress remains in effect for just one year, and continue to work with our allies to seek a permanent solution to this issue, perhaps in the context of broader legislation dealing with immigration reform.
Registered Traveler
The Transportation Security Administration (TSA) continues to work to advance its pilot project beyond its preliminary stages into a broader public-private partnership model for a permanent Registered Traveler program. TSA recently announced that individuals would pay no more than $28 to obtain the background check and other related materials needed to verify a traveler’s identity – a significantly lower amount than had been charged in previous Registered Traveler pilot projects. While the roll-out of this program has been slower than first anticipated, it remains a potentially valuable way to provide additional safety, speed, and efficiency for travel in a post-9/11 world.
Outlook
We will be working with industry allies throughout the coming year to help the Department of Homeland Security and selected sub-agencies flesh out these programs – particularly where we can specifically define impact on the traveling public
.IHG System Role
IHG and the IHG System are seen in these discussions as reliable sources of dependable data, available to testify before Congress, meet with staff and interact with DHS leadership. We will continue to sustain that role.
Immigration Reform
Background
With estimates of the number of undocumented workers living in the United States approaching or exceeding 12 million, immigration reform has once again become a topic of discussion on Capitol Hill. Three competing issues frame the immigration debate: the national security implications of millions of undocumented aliens living within our borders; the need to enforce immigration laws; and the economic benefits provided by undocumented workers currently living in the U.S.
Current Status
The 109th Congress saw much debate on the issue of immigration reform, but few substantive results. In December 2005, the House of Representatives passed an “enforcement-only” bill, which focused strictly on border security and did not address the status of undocumented workers currently residing in the U.S. Members were unable to reconcile the House legislation to a Senate bill, passed as the result of a bipartisan compromise, that included both a guest worker program and a path to citizenship for many undocumented workers.
While Congress did pass a measure authorizing the construction of 700 miles of border fencing – only some of which received appropriations funding – many other issues remain to be resolved, both with respect to border security and the status of the approximately 12 million undocumented currently living within our borders. President Bush acknowledged the incomplete state of immigration reform when signing the border fence bill, using it as an opportunity to call for a guest worker program.
Outlook
Comprehensive immigration reform stands a better chance of passage under a Democratic Congress, though finding a compromise solution will be neither easy nor quick. The Republican party remains deeply divided on this issue – many critics of the President’s proposals label them “amnesty,” and many House conservatives rebelled against approving any legislation that included a guest worker program or a path to citizenship.
A Democratic House will be much more likely to approve legislation consistent with the bipartisan, comprehensive compromise which passed the Senate in May 2006. However, because of the controversy that accompanies talk of immigration reform, Democratic leaders are likely to take a more deliberative approach, focusing first on issues with a greater bipartisan consensus before tackling the political minefield of immigration. With tensions running high on this polarizing issue and both sides lobbying their positions intensely, whether a compromise can emerge on immigration reform, and what that compromise might entail, are nearly impossible to predict.
IHG System Role
Because of franchisees’ need for a sensible immigration policy, IHG has long been an active member of the Essential Worker Immigration Coalition (EWIC), which along with the U.S. Chamber of Commerce has stepped up its efforts on immigration reform to reflect the ongoing political and legislative discussions on this issue. Through its EWIC membership, IHG will attempt to achieve a reasonable compromise on this issue that recognizes both the need to maintain a secure border and the vital role played by immigrants in supporting American economic growth.
Franchisees can assist in this effort by providing examples of problems they have encountered with respect to labor shortages and any difficulties faced in finding workers.
Accessibility Guidelines Revision
Background
Significant and potentially costly changes in the Americans with Disabilities Act Accessibility Guidelines (ADAAG) are making their way through the regulatory process. The proposals address the accessibility of hotel properties – and other public facilities -- to people who are disabled. On September 30, 2004, the Justice Department published an Advance Notice of Proposed Rulemaking (ANPRM), indicating its intent to publish a proposed rule to implement changes to the ADAAG developed in an earlier rulemaking by the Architectural and Transportation Barriers Compliance Board (Access Board). The Access Board published its final rule on July 23, 2004; that rule will not have the effect of law until the Justice Department has completed its own rulemaking process.
Current Status
The Justice Department has indicated it plans to issue a proposed rule in mid-2007. The proposed rule will take into account comments received in response to the ANPRM on a number of issues, the most relevant to the hotel industry being the question of what constitutes “reasonable accommodation” of an existing facility. In proposing its rule, the Justice Department will have to determine how the new rule will impact existing construction – an issue that the Access Board has determined to be outside of its jurisdiction. Much of the cost of compliance with the ADAAG comes not from new construction, but from requirements to make changes in existing buildings.
Outlook
Once proposed, the rule will be subject to public comment, after which the Department will develop a final rule. Once the final rule is cleared by the Office of Management and Budget, it will be published in the Federal Register, with an effective date of anywhere from six-to-18 months from publication likely. Justice has indicated that it intends to conduct a regulatory flexibility analysis, and that it will consider the cost of existing construction in performing its cost analysis.
IHG System Role
IHG has been a leader in the AH&LA ADA Committee, which is engaged in ongoing dialogue with the Justice Department. The Committee met with Assistant Attorney General for Civil Rights Wan Kim on September 19, 2006 to discuss the industry’s concerns about the proposed rule. Priority topics of dialogue with the Department include accessible guest room dispersion, the cost of making existing rooms fully accessible, what alterations to a guestroom trigger a requirement to make the rooms fully accessible, construction and manufacturing tolerances, equivalent facilitation for pool entries and other elements, and exercise rooms. IHG will continue to work with the AH&LA and other interested parties in assuring that the Justice Department accurately evaluate the cost of implementing the new rule.
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