Fiscal Cliff Notes: How the Deal May Adversely Affect Business Travel

The cloud of consternation over the U.S. Government’s “fiscal cliff” deal last month is starting to lift and we’re getting a clearer view of how the legislation will affect the business travel industry. The forecast? Not all sunny skies.

In fact, provisions in the deal may result in even longer lines at customs thanks to budget cuts, and proposed tax reforms will have ramifications in business travel for T&E and travel managers.

Here’s the lowdown:

Budget cuts = airport headaches

For many government agencies, fiscal year 2013 is supposed to enact an 8 percent budget cut – including U.S. Customs and Border Protection and the Transportation Security Administration. That directive is called a “sequester” that was enacted in 2011, and the fiscal cliff deal delays its effects for two months.

That means it’ll be March before we know how the 8 percent cut will affect your next trip to the airport. The U.S. Travel Association worries the budget deal could lead to regular, multi-hour long TSA lines at major hubs.

 

Tax reforms and T&E

 

Used to expensing your meals, mileage and Wi-Fi? The Global Business Travel Association is on guard to protect those deductions in 2013, though upcoming corporate tax reforms may impact traditional T&E to help the United States balance the books.

“Traditionally accepted business deductions, including the travel and entertainment tax deduction, remain at risk,” GBTA executive director Michael McCormick wrote in a January letter to members. For now, the fiscal cliff deal preserves T&E deductions, but the GBTA warns the industry to “remain vigilant.”

We’ll find out in March whether the “sequester” will lead to longer lines at customs and security. But while it seemed the fiscal cliff talk stormed on for months, Washington, D.C. is still foggy when it comes to the law’s long-term ramifications for travel and expense.

 

How is the fiscal cliff affecting your business or industry? Share your experiences in the comments below.

 

 

Featured image courtesy of: Randall Chancellor

 

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