America’s taxing destinations: Cities that sock it to travelers

Which American cities impose the highest discriminatory travel taxes on lodging, car rentals, and meals? A new survey by EconFirst Associates and the NBTA Foundation reveals the answers, and you probably won’t guess the winner — I mean, loser.

Did you say Portland, Ore.? If you did, it’s either a lucky guess, or you get around, or you live there. P-Town’s discriminatory taxes against travelers added up to a whopping $21.55 a night. (Discriminatory taxes are calculated by excluding general sales taxes to count only taxes that target car rentals, hotel stays and meals.)

Here’s the full list:

1. Portland ($21.55)
2. Boston ($21.52)
3. Minneapolis ($16.51)
4. Indianapolis ($15.89)
5. New York ($15.29)
6. Washington ($14.55)
7. Kansas City ($14.53)
8. Chicago ($14.22)
9. Charlotte ($13.70)
10. Philadelphia ($13.61)

The average discriminatory tax in the top 50 markets was $10.42 a night. Oddly, when it comes to overall tax burden — a figure that includes general sales taxes — Portland ranks as the third least-expensive city. Go figure.

Michael McCormick, director of the National Business Travel Association, says enough is enough.

It is unacceptable that visitors, whose general tax dollars can help to keep a community afloat in difficult economic times, are forced to pay so much more taxes and fees to fund projects unrelated to the services they purchase.

On average, the fees targeting travel services increase the tax burden by more than half, and in the worst cases, by up to 144 percent. Rest assured, companies are taking notice of these unfair burdens when determining how and where to spend their business travel, meetings and events dollars.

I agree. This is worse than taxation without representation, it is discriminatory taxation without representation.

Tourism authorities are acting as if we’re piggybanks without choices in where we visit. Nothing could be further from the truth. Travelers are not their personal ATM machines, and we do have a choice.

After this report, we may well be more inclined to exercise it.

Update (3 p.m.): Via Twitter follower user47: “Surprised Kansas City is only ranked 7th. This is a 100% authentic Avis receipt. Taxes and fees DOUBLED the price.

Unbelievable.

(Photo: Alan Cleaver/Flickr Creative Commons)

  • http://www.talestoldfromtheroad.com Dick Jordan

    I was surprised not to find Phoenix on this list. The on-airport rental car pickup “tax” seemed very high to me; I saved a bundle by renting from the same company at an off-airport location on my last trip in March 2009. Perhaps the hotel/meals taxes are lower in Phoenix than in the cities you mention.

  • Mike Z

    Considering Portland is the 3rd lowest in central city taxes, I would believe that means that they are really gouging the airport customers, not travelers in general.

    I’m also shocked that Las Vegas isn’t in there. The amount of taxes on a car rental are amazing and the hotel tax can really add up.

  • David H

    Take a look at a map. Charlotte is the only city on the list further south than Washington, D.C. (Kansas City is about the same level). In the same article, the top 5 lowest for discriminatory taxes are all in California. The Northeast seems to be the biggest cuplrit.

    I think that if vacation travellers want to avoid getting gouged by their destination cities, it looks like they should stick to the southwestern states.

  • Rebekah

    As a long-time Portland resident who occasionally stays in local hotels, I always get ‘sticker shock’ when I go elsewhere and see how much lower the taxes on hotels are. Nice to know we’re such an over-achieving city.

  • Linda Park

    Columbus OH has a 16 3/4% tax on hotel rooms. I go there each year for a convention, and now stay at a hotel that includes a free breakfast, free evening drinks, and now even free hot appetizers in the evening. They also have a refrigerator and microwave, so I will be bringing supplies to eat in my room. I’m going to be there a week, and will probably only eat at a restaurant once or twice. Paying taxes of $22 per night really adds up.

  • Ed

    And you know what? I have no compelling need to visit *ANY* of those top 10 cities in the list…none at all. And I don’t ever foresee a need to go to any of those cities.

  • noah

    Why do taxes on meals discriminate against travelers? Generally, only travelers stay in hotels, so I get why hotel taxes are “discriminatory.” We all eat out, so I don’t see the discrimination there.

    (Frankly, our entire income tax system is just as “discriminatory,” in that it discriminates against the rich by requiring them to pay a higher portion of their earned income in taxes. I generally think that this is a good thing. I think a lot of CA residents would agree — perhaps our taxes would not be so high if we “discriminated” against travelers more.)

  • Bill

    It is certainly nice of these cities to invite us and then let us help to pay for their expenses.

    Maybe each airport could put out a “tip jar” so we could also throw any extra money in – it is always great to be able to help. As an incentive, people who don’t contribute enough to the tip jar can go through a secondary screening!

  • Joshua G.

    Chris, your posting blames “tourism authorities” for these discriminatory taxes. In fact, the taxes are imposed by local politicians who believe that only visitors — who don’t vote locally — will be affected, and thus they can be taxed with impunity. They also believe (correctly, I’m afraid) that very few travelers other than large convention organizers factor visitor taxes when they choose their destinations, so the adverse repurcussions are minimal.

    It is also important to note that these taxes often go to pay for sports stadiums and other projects that have little or nothing to do with visitors.

  • Christopher Elliott

    @Joshua, right you are. I stand corrected.

  • http://www.bytehead.org/blog/ Bryan Price

    Nothing from Florida??? I’m floored! (floridaed?)

    High gas taxes, high sales tax (although that’s now changed, my home town is now a .25% away from what I pay now, and I don’t have to pay any state or local income taxes!), I figured the hotel taxes were jacked just as high.

  • amanda

    I’m also a Portland resident and it is shocking that the taxes for travelers are so much. However, I have friends and know of others who come to Portland to take advantage of the lack of sales tax…on anything…with the “savings” of not paying sales taxes on shopping, meals, the many many breweries in city limits and outlet malls, the beach and mountains within an hour of the city, still seems like a good deal to me. Not that any Oregonians want tourists around :)

  • Josh

    A simple answer is a full disclosure law (federal probably) stating that all prices quoted must be inclusive of all taxes, fees, fake “energy surcharges” etc, for most products/services. Meaning the *first* price you see is the total price.

    Make these taxes part of the cost of the business, and they’ll even themselves out in time. If travellers doing a quick search find that hotels in city A charge $99 a night, and city B charge $109 a night, they’ll steer their business/conferences to city A. Unless, of course, city B is really that much more desirable, in which case the the tax may be justified.

    Let the businesses, who are (theoretically) represented locally, lose the business and close or fight these.

  • http://cestbeth.wordpress.com Beth

    That’s funny, because when I read your list, I also thought Kansas City is only 7th? Their rental car taxes ARE that high, as the receipt demonstrates.

  • Arizona Road Warrior

    I am more interested in the tax percentage than a dollar amount which could be misleading. If you are staying at a resort or a top-tier hotel, you are going to pay more than $ 21.55 per day. On the flip side, if you are staying at a discount hotel, you are going to pay less.

    IMHO, the hotel tax & fee rate and rental car tax & fee rate should be listed as: 1) a total percentage and 2) seperate rates. The reason that the taxes\fees should be separate because sometimes a person may not a rent a car. For example, sometimes the local sales rep picked me up at the airport; therefore, I don’t need to rent a car.

    There was an article in the USA Today within the past few years that listed the taxes and fees in percentage for rental cars.

  • Mary

    So which cities are on the bottom (or top depending how you look at it)?

  • Chicky

    I’m always a little dazed and confused by car rental and hotel taxes. Rented a car a couple of weeks ago. Picked it up Friday, returned it Sunday. On the agency’s web site, I found a coupon for $15 off the rental. That just about covered the taxes and fees. It was nice to just pay the base rate of $62, and I really don’t mind paying reasonable tax on the rental, but doggone it–$15 is about 25 percent of the base rate! That’s just not right. They’re skunking everyone. I rented that car locally for a trip out of town.

  • http://www.dclikealocal.com Tim Krepp

    First off, if you’re visiting DC or New York and renting a car, you’re doing it wrong.

    Secondly, I’m hardly up in arms about this. I’ve visited many of the cities on this list as a tourist (I live in DC) and shelling out $20 bucks a night is hardly going to affect my decision to go back (or visit for the first time).

    Some of the commenters have pointed out ways to save money on trips, and I think that’s a great idea. After all, the tax is only incremental, eating breakfast at a hotel is the real rip-off.

    These places can afford to tax more because they are destination cites. The demand is already there. Either you want to visit New York or you don’t. A few bucks on the outside of your travel budget won’t shift things too much one way or another.

    Oh, and outside the scope of this article, but DC residents already have taxation without representation.

  • J

    Portland, Oregon’s “tourist” tax is most certainly offset by the 0% sales tax on anything else during your trip. Get over it. Check your receipts: at point of sale, we don’t tax your fine dining, your alcohol, your clothing, or any other purchases.

  • Les

    My nominee would certainly be Houston – well to the south of others on the list. Finding that I’m expected (via car rental) to help pay richly for a sports facility I will not visit in this lifetime was annoying to say the least. Being dunned by the hotel for an energy surcharge (!!!) in HOUSTON of all places was downright insulting. The trip was not a leisure visit; a relative was in serious condition at the medical center so my choices were limited.

    I don’t rent cars in Houston any more.

  • Arizona Road Warrior

    I took a quick look at some of my recent car rentals. I paid an average of 37% for taxes\fees on these rentals. In dollars, I paid an average of $ 27.78 for taxes\fees for these rentals.

    Total Rate Taxes Pd %
    San Luis Obispo Airport $83.58 $58.49 $25.08 43%
    Salt Lake City Airport $115.57 $86.89 $28.68 33%
    Salt Lake City Airport $82.44 $61.40 $21.04 34%
    Indianapolis Airport $136.67 $96.17 $40.50 42%
    Orange County (SNA) Airport $109.07 $82.00 $27.07 33%
    Ontario (ONT) Airport $86.09 $61.80 $24.29 39%

    Looking at receipts for recent hotel stays, the lowest hotel room tax was 10%. The highest was 15% for the City of Corpus Christi.

  • The Good Doctor

    I’d also question EconFirst Associates’ numbers. While many car rental fees are fixed (like airline facility charges), the bulk of hotel and car rental surcharges are percentage-based, so if you’re talking about a mid-priced hotel room in Manhattan, the room tax ought to be significantly more.

  • Heather

    To “J” who wrote:
    “Portland, Oregon’s “tourist” tax is most certainly offset by the 0% sales tax on anything else during your trip. Get over it. Check your receipts: at point of sale, we don’t tax your fine dining, your alcohol, your clothing, or any other purchases.”

    Wow…if you represent the attitude of the people who live in Portland….THERE’s the reason not to go….not just the “tourist” tax.
    I didn’t know the “ugly american” syndrome existed in our own country.
    Or is it maybe that you have some hidden hostility because you are paying
    higher city or property taxes that you would have otherwise not be forking
    over BECAUSE there are no sales taxes. Take your hostility on the
    elected officials who pass the laws, not Portland’s “guests”.

    And to “J”, I say this….unless they have alot of bucks, not many tourists are going to do “fine dining”, because the “average” tourist can’t afford “fine
    dining” because of the higher “tourist” taxes! And just how much alcohol do you think tourists drink? Hummm….let’s see, I’m going to go to Portland and
    go CLOTHING shopping???? Or how about an screwdriver from Portland’s
    Home Depot???

    If one IS going to Portland, and not visiting friends or family, HELLOOOOO, their biggest costs is going to be food (probably at McDonalds), lodging (taxes here we come), cultural events/attractions.

    Tourists, raise your hand if you want to pay for City X’s stadium or road resurfing or any HOST of things that you will not be benefiting from!!

    This is a typical ploy….politicians stick it to the tourists of course because they aren’t a constituent. But yet it’s the constituent who benefits from the
    service/project the tourists are paying for. Tourists should
    pay tax on the item/service they are paying for.

    AND, I hope if you ARE a tourist somewhere, check your attitude at
    Oregon’s border. Speaking for Maryland, we don’t want your dollars if
    we have to take the attitude with it.

  • Arizona Road Warrior

    I have questions about the number used in this survey. I don’t buy these numbers at all.

    I have been to Portland, OR at least 100 times during the past 8 years and I never thought that the taxes and fees for hotels and rental cars were high compared to other cities.

    Today, I went to the Marriott website to book a room (2 days) at a hotel in Portland (not one of the surrounding cities) and the hotel tax is 12.5% which is ‘average’ based upon the cities that I go to. I went to the Hertz website to book a rental car (2 days) and again the taxes and fees are 30.24%.

    Recently, I went to Corpus Christi for a business trip. The hotel taxes were 15% and the taxes and fees for the rental car (2 days) were 37.27%.

    I paid $ 38.70 in hotel taxes and $ 37.90 in rental car taxes & fees for a grand total of $ 76.60 or $ 38.30 per day. I didn’t see the city of Corpus Christi on that list.

    For this PDX trip, I will pay $ 27.24 in hotel taxes and $ 44.75 in car rental taxes and fees for a grand total of $ 71.99 or $ 36.00 per day.

    My hotel rate in Corpus Christi was $ 129 per night and my hotel rate in Portland is $ 109 per night. My car rental is $ 74 per day in Portland and my car rental rate was $ 50.84 in Corpus Christi.

    I think that the analysis is skewed by using dollar amounts instead of %. If you go to City A where the hotel room rate is $ 200 per night with taxes of 10%, you will pay $ 20.00 in taxes. If you go to City B where the hotel room rate is $ 125 per night with taxes of 15%, you will pay $ 18.75. Some people will say that City A has the higher taxes but you paid more for a room. If the room rates for both cities were the same, you will pay more taxes in City B.

    To be fair and accurate, you need to use percentages.

  • Erik S.

    Have a look again at the Avis receipt. How many of those “taxes and fees” are mandatory government-imposed taxes that fund the community? When I see “Transportation Fee,” “Concession Recovery Fee,” etc. I see Avis or its local franchisee finding sneaky ways to profit off a rental.
    My cell phone provider, Verizon, likes to play this game too.

  • MeanMeosh

    I have to agree with Arizona Road Warrior, at least in part. Hotel occupancy taxes, and sometimes concession recovery fees, are charged as a percentage of the base rate. Naturally, if you raise the base rate, you’re going to end up with a higher dollar amount. So, the table used in the article is at least somewhat misleading.

    HOWEVER – if you look at the Avis receipt, several of the fees are, in fact, fixed dollar fees. In these cases, if you use percentages, you’re going to get an equally distorted result. A $4 “Kansas City Area Fund” fee applied against a $20 a day El Cheapo rate from Hotwire comes out to a whopping 20%. But apply it to a $70 a day rate for a premium car, and all of a sudden, you’re down to 5.7%, which doesn’t look as bad.

    And none of this changes the fact that it’s rather heinous that city after city uses tourists as their own personal ATM machines so they can tell the electorate that they funded pet projects “without raising your taxes”. Try to find a medium size city or larger that isn’t using hotel occupancy or car rental fees to pay for the biggest public boondoggles in the modern area, taxpayer funded sports stadiums.

  • http://www.darngooddigs.com Michael

    It’s true that I don’t like these “tourist” taxes when I travel, but I’ll say that there is another group that gets hit by these taxes – specifically the rental car taxes – that makes them even more unfair. I live in Brooklyn, NY, and like many other New Yorkers, I don’t own a car. Instead, I rent anytime that I want to leave the city. It works well for us as a family since we don’t need a car to get around the city, and we don’t have to deal with the hastles of parking. It works well for the City because there is one less car to clog the streets. Still, we – along with thousands of other New Yorkers (many of whom have less money than the city’s car owners) – have to pay the city and state rental tax. “The current sales tax on car rentals in New York City is 8.375% and the New York State car rental tax is presently 11%” – that’s essentially a 19% tax that doesn’t just hit tourists, but also hits locals who don’t fit the model of the American multi-car owning family. It ends up being a tax that works against the city’s own interests.

  • Carver

    I concur with Arizona and MeanMosh. The numbers for taxes are meaningless. To give a proper analysys you have to break out the numbers into two categories, fixed dollar fees/taxes and percentage fees/taxes

    @Meanmosh

    Surprisingly, one large city with exceptionally low car rental taxes and fees is Los Angeles. The only really onerous fee is the $10 fee charged by by the airport.

  • Johannes

    Portland is indeed a pretty city to visit and quite affordable. J’s point isn’t to be hostile, but to say that really, it’s not an expensive place to visit, especially compared to nearby Seattle where the sales tax is 9.5% and the cost of living is generally higher. And by “fine dining” I don’t think he literally meant ONLY fine dining, as there is no tax on prepared food, either (so Heather, your McDonalds meal will actually be even more affordable than you’re used to). He’s 1 guy that stated his own opinion that for better or worse doesn’t represent the entire city of Portland, so quit yer cryin about ugly Americans and chillax. Seriously.

    On the points about hotel and car fees, I agree that we should break them down and identify them as % based and flat-fee based, to which car fees seem to adhere to the latter. There are so many discounts from various coupon books/membership clubs etc to car rentals though that I’ve always seemed to get pretty good deals on a car whenever I travel around the US on biz. And for gosh sakes people, try smiling and being nice; the guys and gals behind the counter will do so much more for you when you’re actually pleasant.

  • karend

    Erik makes a very good point. Many travel companies quote one price, then tack on extra charges and fees that go right into their pockets – making it appear that travelers are being soaked by the government of the city the tourists are visiting. A local would be more likely to detect this scam.

    Some big online travel sites go a step further – they pocket some of the actual tax! They charge customers the going rate on the price paid – which looks legit to the customers – but only remit to the state enough tax to cover the price paid for the room when the online sites were buying excess inventory.

  • Carrie

    It makes sense that Portland is cheaper when you throw the sales tax in–there is no state sales tax in Oregon, which more than makes up (in my mind) for the “discriminatory” tax.