Kentucky Reverses Course on Space Rental Sales Tax for Exhibitors and Sponsors, Thanks to Advocacy Efforts
The Kentucky General Assembly has passed legislation that includes a revision (from 6% to 0%) to the commonwealth’s sales tax on exhibit and sponsor space rental for face-to-face business events. Signed into law by Governor Andy Beshear on March 24, it states that business event organizers will be exempt from charging sales tax to their exhibitors and sponsors, essentially reversing a new 6% tax that went into effect on Jan. 1.
Some trade show organizers began collecting taxes from exhibitors and sponsors to be in compliance with the new law, while others informed exhibitors who signed new contracts after Jan. 1 that a sales tax may be a possibility and had put the processes in place to start collecting if they had to.
Advocacy in Action
In December, Louisville Tourism, the Exhibitions and Conferences Alliance (ECA) and the Society of Independent Show Organizers (SISO) voiced strong opposition to the measure. ECA partnered and coordinated advocacy efforts on the ground with the Kentucky Travel Industry Association (KTIA) and Louisville Tourism.
“It was a team effort that would not have been possible without support from KTIA and Louisville Tourism,” said Tommy Goodwin, vice president of government affairs for ECA, a coalition of 10 professional, industry and labor organizations dedicated to the advancement of the face-to-face business events industry.
Related: INDUSTRY ENTITIES VOW TO FIGHT NEW KENTUCKY TAX ON BUSINESS EVENTS IN 2023 (Dec. 20, 2022 on TSNN)
The amended legislation is welcome news for trade show organizers and exhibitors. Kentucky is home to some of the U.S.’s largest trade shows, including Equip Exposition, set for Oct. 17-20 and The Utility Expo, scheduled for Sept. 26-28, both in Louisville.
“We’ve been here for 40 years,” said Kris Kiser, president and CEO of Outdoor Power Equipment Institute, which owns and manages Equip Exposition and is celebrating its 40th show in 2023. “We’re very happy with the Governor’s decision.”
Other shows, including the Association of Equipment Manufacturers (AEM) and the Utility Expo, were also pleased with the revision.
“A sales tax on exhibit space would have put Louisville and Kentucky at a significant disadvantage among competitive markets and set an undesirable precedent for the event industry nationwide,” Utility Expo Show Director John Rozum said. “We are very grateful to not have to also impose a new tax burden on our exhibitors, who are already bringing millions in tax revenue to the market through room tax, food and beverage and vendor expenses.”
The new law was also set to impact exhibition industry suppliers who will be exhibiting at EXHIBITORLIVE, which will be held April 23-26 at the Kentucky International Convention Center (KICC) in Louisville.
Advocacy in Action
“In Kentucky and nationwide, face-to-face business events are vital to driving economic growth, supporting job creation and empowering small businesses,” Goodwin said. “This important policy change, alongside Kentucky’s legendary hospitality, will ensure that the commonwealth is well positioned to benefit from attracting and hosting exhibitions, conferences and trade shows for many years to come.”
Meetings and conventions held in Kentucky generated $748 million, according to KTIA.
“This has been a classic example of two aspects of legislation,” said KTIA President and CEO Hank Phillips in a press release. “One is that unintended consequences are virtually inevitable, which is what gave rise to the exhibitor issue in the first place. The other, and more important aspect, is what can be achieved when a team comes together to work toward a solution.”
He continued, “Along with KTIA, Kentucky destination marketing organizations, many of their meetings and conference partners, and ECA from the national level together formed an extremely effective team. In addition to our deep appreciation to our team members we also want to express our gratitude to Governor Beshear and to the General Assembly for their support on this issue.”
Kentucky Venues, which manages KICC and Kentucky Exposition Center in Louisville, hosted 334 events attracting 2.3 million attendees, which generated 385,121 hotel rooms and an economic impact of $316 million, according to the 2022 Kentucky Venues Annual Report.
“This revision makes good business sense and is a win for Kentuckians, the tourism economy of Kentucky and the groups we do business with,” said Louisville Tourism President and CEO Cleo Battle. “It helps Louisville and our fellow Kentucky cities compete for lucrative convention business that helps our hospitality industry employ 60,000 citizens of Louisville alone.”
Despite the reversal of the 6% tax on space rental for exhibitors and sponsors, event organizers should note that they will still have to pay a 6% tax on business event space rental in Kentucky as part of the measure that went into effect Jan. 1. Several other states also impose a tax on space rental for event organizers.
Main photo: Equip Expo 2022 at Kentucky Exposition Center