by Michael J. Shapiro | February 01, 2013
On New Year's Day, the U.S. Senate and House of Rep­re­sen­tatives passed the American Taxpayer Relief Act, which allowed the U.S. to avoid the threatened "fiscal cliff."

Most significant to the meetings and travel industries, according to the U.S. Travel Association, was the fact that the legislation merely delays the automatic cuts to government agency budgets, called sequestration, of approximately 8 percent for fiscal year 2013. The deadline for those cuts, which were to take effect at the beginning of 2013, has been postponed until March 27, unless legislators can negotiate a new deal.

U.S. Travel president and CEO Roger Dow has written to congressional leaders, warning of the harmful effects such cuts could have on the travel industry. "We are primarily concerned about the ability of U.S. Customs and Border Protection and the Transportation Security Administration to manage increased travel loads on a reduced budget," Dow wrote in an open letter to industry colleagues in January. "Cuts to CBP, for example, could lead to regular, multihour long lines to clear customs at major gateway airports. In addition, the sequester [of funds] would jeopardize longer-term projects like the Federal Aviation Admin­istration's NextGen air traffic modernization program."

The Taxpayer Relief Act also raises personal income taxes to Clinton-era levels for those in the upper brackets (families earning more than $450,000), and limits deductions, two factors that could affect discretionary spending and travel, according to U.S. Travel. But perhaps even more significant could be the discussions that ensue over the next two months.

"The continued brinkmanship, wall-to-wall media coverage and ongoing concerns over spending cuts and taxes will occupy all of the first quarter," noted Dow, "which could erode consumer confidence and delay discretionary spending."

Concerning employment in the hospitality industry, the Work Opportunity Tax Credit was reauthorized through the end of 2013, meaning employers will continue to receive breaks for hiring veterans, disabled workers, youths and some other target groups who consistently have faced barriers to employment.