A 73 percent tax increase on car rentals in Wisconsin? That can’t be right

But it is right, according to the car rental industry, which is doing everything in its power to prevent the passage of a new law in Wisconsin that would raise car rental fees from $2 to $18 per rental to fund mass transit projects, and giving the Badger State the highest car rental taxes in the nation.

The new surcharges, which are proposed as part of Wisconsin’s budget bill, have already passed the Assembly and are being considered by the Senate today. So why haven’t you heard anything about this 73 percent increase in your car rental bill? A look at the bill (PDF) — hope your computer has lots of memory — shows how this issue has gotten buried in the 2009 budget debate.

But car rental companies are making a last-ditch effort to derail the tax. Here’s what it sent to Wisconsin legislators earlier this week:

I am writing today as your constituent and as an employee of Enterprise Rent-A-Car to ask that you oppose the KRM rail authority fee, which will increase the rental vehicle tax in Kenosha, Racine, and Milwaukee counties to 73.6% tax on a $30 rental.

Our customers already pay 20% in taxes, most of whom are Wisconsin residents accustomed to paying a standard 5.6% sales tax for other goods and services. Adding an additional $16 per transaction ($18 total) is even more unfair; and if enacted, these counties will have the highest rental car tax in the country – by a long shot.

Higher taxes means fewer car rentals, and this in turn will limit employment opportunities for my fellow employees and me. Every day, Kenosha, Racine, and Milwaukee residents and businesses use rental cars for a variety of reasons:

* Some need a specialty vehicle for a household project, like a pick-up truck or a van.
* Many employers prefer to rent a car for employees traveling on in-state business in lieu of reimbursing for mileage on a personal vehicle. Many employees prefer this too, as they don’t rack up miles on their own car.
* Also, many of our customers simply don’t own cars, either because they can’t afford it, or simply choose not to for other reasons. These residents rely on affordable rental cars for transportation when public transit is not an option.
* Some need to rent a larger vehicle for a vacation or out-of-town trip
* Many parents rent cargo vans to move their children to college
* Some families rent an additional vehicle to accommodate family visiting from out of town
* Some rent a luxury car for a special occasion like a wedding

I can think of no reason why Wisconsin residents using a rental car for these purposes should bear the burden of a 73% tax to pay for a commuter rail line.

At a time when the auto industry is clearly struggling, I ask you to oppose this $18 fee and any new rental car tax, and support a funding mechanism that spreads the burden across a larger group of beneficiaries.

A 73 percent tax increase seems a little steep to me. And for what? A train that tourists are unlikely to use, like South Florida’s Tri-Rail? Well, we don’t know that — yet.

It is more than just a little ironic  that the now-bankrupt car industry allegedly systematically dismantled mass transit in the 20th century. Today, cars are funding the return of trains.

But I believe there’s a right way and a wrong way to do this. And a fly-by-night approach to raising taxes on drivers, many of whom can’t vote and may not benefit from the mass transit projects, is the wrong way. This issue deserves its own debate, far removed from the the chaos of Wisconsin’s budget bill.

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at . Got a question or comment? You can post it on the new forum.

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