Industry Entities Vow to Fight New Kentucky Tax on Business Events in 2023
With a looming new 6 percent Kentucky tax on 35 services, including business events, Louisville Tourism, the Exhibitions and Conferences Alliance (ECA) and the Society of Independent Show Organizers (SISO) are voicing strong opposition to the measure, which could be detrimental to the state’s trade show, convention and meeting business. It also would pose an undue burden on event organizers and clients, as the industry continues to recover following the COVID-19 pandemic.
The measure is set to take effect Jan. 1 and apply to many new services that have never been taxed in Kentucky, including meeting room and event space rental, social and event planning and coordination, and many others.
The new tax, which appears to be an attempt to eventually phase out Kentucky’s 5 percent individual income tax over several years, would be implemented for any event held socially, such as trade shows, conventions, conferences, off-site venue events, concerts and weddings, and obviously add a new fee to the already growing cost of doing business, according to Cleo Battle, president and CEO of Louisville Tourism.
“This tax will put Kentucky at a disadvantage in competing for lucrative convention, meeting and event business that drives economic growth throughout the state by making the cost of doing business here more expensive,” Battle said. “This will result in lost business for Kentucky and all its towns and cities that rely on events for economic impact to facilities, lodging, attractions and the many small businesses that depend on convention and event activity.”
Battle added, “It’s punishment for an industry that has certainly suffered enough and is trying to get back on its feet to support the thousands of jobs that rely on it.”
Louisville's events business has been heading in the right direction, substantially growing since withstanding pandemic-related losses in 2020 and 2021, according to Battle. In 2019, which was a record year for the destination, it hosted more than 800 events, and in 2021, it hosted 158. This year, Louisville has set the stage for more than 600 events.
Louisville Tourism is working with its regional, national and global partners, including the Kentucky Travel Industry Association, which Battle said has made the new tax their legislative priority, and will be actively fighting to keep the industry competitive.
Louisville Tourism also will work to evaluate opportunities on a case-by-case basis to provide offsets for groups looking to book business with the destination.
While Kentucky Venues, which encompasses the Kentucky International Convention Center and the Kentucky Exposition Center in Louisville, could be highly impacted by the new measure, Spokesperson Ian Cox said its operations will be in compliance with the new tax, and the venues are working closely with new and existing clients to document and share information regarding the change from policymakers.
Despite the added tax, Cox said Kentucky remains a cost-effective place to do business, and Kentucky Venues is committed to providing exceptional experiences for its clients.
“We are continuing to discuss with each client their specific needs and expectations to help grow their event,” Cox said.
Meanwhile, Tommy Goodwin, vice president of government affairs for the ECA, a coalition of nine organizations advocating the face-to-face business events industry, called the taxes “troubling,” noting that the alliance condemns all state efforts to tax face-to-face events and that the ECA is working with its industry partners in Kentucky to address the measure with the state legislature.
“The new taxes create a disincentive for hosting future conventions and trade shows in Kentucky,” Goodwin said. “Given how important events are to the economy and jobs in Kentucky, ECA is strongly encouraging the Kentucky legislature to address this important issue as part of its forthcoming 2023 legislative session.”
ECA member organization SISO emphasized its vehement opposition to the tax.
“SISO’s leadership is very much against the new Kentucky sales tax as it has been described to us,” said David Audrain, co-president of ECA, outgoing CEO of SISO and CEO and partner of Exposition Development Company. “The expectation that event organizers will have to start becoming tax collectors for the state of Kentucky by having to add the 6% sales tax onto all exhibitor and attendee fees—from exhibit space and sponsorships to exhibit hall and conference registration fees—will add both a significant cost to our customers and a significant burden to the organizers.”
Audrain added that he is unaware of any other state or city that has implemented a tax on exhibit space and B2B registrations
The initial reactions from SISO members have not surprisingly been very negative, according to Audrain, and he is already aware of several event organizers who were considering Louisville as a venue and have removed it from their list of prospective destinations as a direct result of the new Kentucky tax law.
“This is unique to Kentucky, and SISO members that I have been talking with have said simply, ‘Why would we choose Kentucky if we don’t have to?’” Audrain said. “This is another example of why the industry needs to advocate for itself as one voice, and we are working on this through the ECA.”
The Kentucky Department of Revenue has not issued formal regulations on the new tax, but limited guidance and FAQs can be found here.
According to Louisville Tourism officials, it is their understanding that business events contracted prior to February 2022 will not be affected by the 6 percent tax.
Photo: Louisville skyline