Drivers want Congress to curb car rental taxes

Should Congress limit the taxes a city or municipality can impose on a rental car?

It’s a question elected representatives are likely to take up soon, as they consider the End Discriminatory State Taxes for Automobile Renters Act of 2009. The law, which is backed by car rental companies, would limit the excise taxes a municipality can impose on rental cars.

Cities are fighting the measure, saying it would curb their ability to raise money and represents an unwanted federal intrusion.

But a survey of more than 600 travelers conducted last week by this site and the Consumer Travel Alliance suggests drivers are on the side of car rental companies.

Asked if Congress should freeze the discriminatory excise taxes imposed by some cities, 78 percent voted “yes.” Only 21 percent rejected the idea.

Travelers say they are most outraged by the discriminatory “tourist taxes” that fund sports stadiums and convention centers that they’ll never benefit from.

“I do not enjoy paying outrageous taxes for some billionaire to get a free stadium,” says Ted Clopton, a frequent car renter who responded to the survey. “Let those who attend the games pay for it in higher ticket prices. I think consumers should pay for what they use.”

The proposed bill wouldn’t roll back the controversial stadium taxes, according to Chris Brown, the executive editor of Auto Rental News. Rather, they will prevent any new ones from being imposed.

“Certainly, removing already existing excise taxes would have been preferable,” he says. “But the auto rental industry will be satisfied that, with the passage of this bill, all new discriminatory taxes moving forward would be prohibited from being heaped on auto rental customers.”

But other motorists said they were against the measure, mostly for ideological reasons.

“We don’t need the federal government controlling any more aspects of our lives. These cities will eventually realize that the convention and vacation traffic will go somewhere else if they get too oppressive with their taxes,” said one commenter.

It looks as if we’ll have an answer to this question soon. The car rental industry is stepping up its efforts to get the End Discriminatory State Taxes for Automobile Renters Act passed later this year.

  • Cynthia

    I am all for these particular taxes going away as they can sometimes add up to as much as the daily rate (if one is renting economy or compact class). Add to that it is a form of taxation without representation as the tax is being applied in most cases to those who have no opportunity to vote for or against it. Especially given that most renters are from places far away from the rental location.

  • http://everything-everywhere.com Gary Arndt

    I’d like it if the taxes and fees were more upfront. There should be a sign at the car rental facility at least.

    If you do a one day car rental in some cities, it will almost double the price of the rental. In fact, if you get a deal on Priceline, you probably will pay more in taxes than you will for the car.

  • jayne52

    I hate these taxes. Miami and Broward FL does this, and Jeff. Co AL where I rent cars frequently. I think it is a rotten way to treat visitors to your State or city. Right off the flight I am hit with an 8% tax or “Airport user fee.” It stinks.

  • Flyer

    Naturally the renters on the side of the car companies.. no mystery there.. to a point, they’d be on ANY side where it resulted in lower costs– so whose ‘side’ it is, is to a point, immaterial, it’s an economic position.

    While I do dislike the taxes and do feel that they are used as a way to tax those who cannot (in most cases vote), I DO also have some concerns about allowing the federal government to step in and being to control and dictate what can and cannot be taxed and to what extent.

    If you really want to look at it, almost any tax that a visitor pays– be that sales taxes on goods bought and exported with them, etc. are all taxes imposed without the right of representation. So, the notion that it’s only car taxes just isn’t a true picture… but I get the base argument..

    But by contrast, that same argument can be made literally any time a person goes outside his/her home city/county/state and incurs taxes.. If I pay a county sales tax but cannot vote on county measures is this any less right or wrong than a out-of-stater paying car rental taxes?

    I agree the taxes are high, but I am loathe to allow the feds to step in and add more regulation as to how state level enterprises are run and administered.

  • David Emery

    This goes too far. I strongly dislike the piling-on of municipal taxes, but I’d assert this kind of Congressional interference violates the spirit, if not the letter, of the Constitution. It’s really hard to argue municipal taxes are consistent with the (interstate) Commerce clause. We need to stop looking to the Federal Government to solve all our problems.

  • Tom

    Is there an example in American history where a government entity has acted to limit taxes? It’s pretty much up, up and away, particularly in this era when government workers are concerned about the viability of their pension plans.

  • LeeAnne

    I would like to see the Federal government go BEYOND this – let’s see them enact some laws that will put a stop to these fake car-damage SCAMS that the rental agencies are perpetrating! Make it a law that they can’t just bill someone for damage that could have happened before or after the renter had the car…that they must provide proof that the car was damaged while in the renter’s possession. And outlaw the practice of rental agencies dumping huge engine-repair charges on renters when the car they rented malfunctions because the agency didn’t perform appropriate maintenance on it.

    It’s now at the point where I will do everything I can to avoid renting a car, because it’s just too fraught with danger of getting huge amounts of money swiped from my wallet through undisclosed taxes and fees, and unfair damage claims.

  • MeanMeosh

    I don’t like these taxes any more than anybody else, but there’s a big, BIG problem here. If you’re talking about an “airport facility charge” that’s arbitrarily added on by an unaccountable, unelected airport authority, that’s one thing. But in many cases, these additional hotel and car rental taxes that are being used to fund (admitted boondoggles) like sports stadiums and convention centers were VOTED on by the citizens in that city, county, or state. Whether you like these taxes or not, the bottom line is, the federal government has no business sticking their nose in financial matters that were approved by state or local voters. That is a slippery slope you don’t want to get on. What’s next, the ability of Congress to have veto power over ANY state or local tax that some lobbyist considers unfair to their industry? Do you really want to invite federal oversight of your county vehicle registration fee because the auto dealers ask Congress to ban them because they’re hurting auto sales? And like Flyer said, you can make the same argument about sales taxes. When I visit Colorado, for example, I didn’t have the opportunity to vote on the sales tax that’s charged on any purchases I make. Should the federales have the right to regulate those, too?

    If the car rental industry doesn’t like these taxes, they have choices. There’s nothing stopping them from campaigning against special tax elections to defeat them locally. The measure in Dallas to raise the hotel tax to pay for the American Airlines Center stadium barely passed; if the hotels cared enough to put up a strong campaign against it, it probably would have failed. The convention industry (and regular travelers) also have choices here. They can avoid areas that pile on the taxes, and if you’re renting a car, you can always head to an off-airport location where many of the taxes are inapplicable (and the base rates are often lower to boot).

  • jayne52

    I rented a car this morning from National in BHM. for a $148 rental they have charged $28 extra for various airport fees!

  • LeeAnne

    @Flyer – you wrote: “But by contrast, that same argument can be made literally any time a person goes outside his/her home city/county/state and incurs taxes.. If I pay a county sales tax but cannot vote on county measures is this any less right or wrong than a out-of-stater paying car rental taxes?”

    The difference is that sales taxes etc. are voted on by a populace that knows they will be impacted by the taxes – so there is a motivation to keep them reasonable. Taxes imposed ONLY on people visiting an area are simply unfair – they are voted in by people who will not be subject to the tax, but will receive all of the benefit. That is TRUE taxation without representation. There is no motivation for voters to limit these taxes, since they won’t have to pay them. That’s what keeps taxes limited: voters provide the balance between what they are willing to pay in taxes, based on the benefit they will bring them. With these car rental taxes, the balance isn’t there – none of the people who will have to pay the taxes, have any say in them!

    While I don’t want the Federal government interfering in local taxes that impact me, I think they DO need to get involved in limiting the ability of a municipality to impose taxes that ONLY impact people who have no say in the matter. That IS something I want my Federal government to curtail.

  • Jasper

    I don’t want the Feds to come in and tell local governments what they can and can not tax. That is a very slippery slope.

    What needs to happen is that citizens stop their own local government from applying these taxes. It’s a simple choice between greed and decency.

    Look at it this way. If your local airport charges such taxes on visitors to your home region, you can not be complaining about others doing it to you.

    It is very easy to complain about “others” doing this to you, but really, what counts is what you did when your local government decided to tax your local airport.

    Don’t do to another what you don’t want to be done to you.

  • Flyer

    @LeeAnne

    Disagree.. When I pay any county or city taxes to a county or city to which I do not live– ergo am not eligible to vote, this is the same.. taxation without representation.. What’s the difference between city or county sales taxes paid by non-city or county resident versus car rental taxes paid by a non-resident? In the end, it’s fundamentally the same– taxing without the right to vote to it.

    In both cases the tax paying party is not eligible to vote for or against these taxes and in most cases will not see direct* (direct being of course relative) gain from such taxes either..

    So, the out of town person who pays car rental taxes to fund stadiums etc. is, in my opinion, really no different that a person who travels outside of his/her city, county or even state and therefore pays sales/use taxes into the coffers of another public entity to which they have no voting power over nor will either gain any direct benefit from.

    I see this as a purely state level decision and I am still loathe for the federal government to get further involved in State, County or City level taxation matters and exert any more legislation into such matters. Until such time as I can see that the matter truly transcends state lines– thus becoming an interstate commerce matter, I continue to believe that the matter should remain within the States rights to manage– and be held accountable for.

  • Carver

    @Flyer and Leeanne

    You both make excellent points. LeeAnne argues that this a taxation without representation because it is targetted at a group of people that are unlikely to be able to vote on the taxes. That is a fair point. I’m sure a good number of car renters particularly at airport locations are from out of state. Perhaps that’s why a megastate like California has very low car rental taxes since there is a ton on intrastate air travel.

    But I do disagree with LeeAnne in one major point. The out of state person does have some say. He or she can decline to do business in that state, thus voting with your wallet.

  • Carver

    @Leanne

    One thought. There are numerous taxes which are voted on by people who are not directly affected. The most obvious one is property tax. It is levied solely on real estate owners. Is that tax similiarly unfair since renters don’t pay it.

  • MeanMeosh

    @ LeeAnne

    I respectfully disagree with your position. As an example, yes, someone who lives in Dallas isn’t “directly” affected by the 10% hotel tax to pay for the AAC (much like I’m not directly affected by Arlington’s decision to raise their sales tax by 1/4 point to give Jerry Jones $350 million to build his grand palace to honor himself). BUT, it isn’t entirely true to say there’s no effect on the populations that vote for these taxes. You raise the hotel or car rental tax too much, you start driving away business, which impacts a lot more than just hotels losing business.. After all, why would anybody hosting a convention voluntarily pay more to host their convention in Dallas, if they can get a better deal in, say, Oklahoma City? And if all those conventioneers head up the road to OKC, all their spending on things like restaurants, liquor, souvenirs, etc. go with them. It’s really the same effect as raising sales taxes too high.

    And I still stand by my earlier statement – you really don’t want to get on that slippery slope of allowing Congress to outlaw the ability of citizens to vote on local matters just because some special interest group says it’s unfair to their industry.

  • Thomas

    I think some of you are missing a point. What about when you need to rent a car where you live. Your power goes out and you need a hotel, you pay.

    The state of Florida has been living on these taxes for years, and now it’s dying due to the drop in travel.

  • LeeAnne

    @Carver – you wrote: “One thought. There are numerous taxes which are voted on by people who are not directly affected. The most obvious one is property tax. It is levied solely on real estate owners. Is that tax similiarly unfair since renters don’t pay it.”

    I think you got my point backwards. My point is not that people who are not affected by the tax get to vote on it – that happens with lots of taxes. My point was that the people who ARE (mostly) affected by it DON’T get to vote on it.

    Property owners do get to vote on the taxes that affect them. Yes, people who aren’t property owners do as well, but at least the owners themselves DO get to have a say. With rental car taxes, the vast majority of people who are impacted by the tax have no say whatsoever. They don’t live there, they don’t get to vote.

    Do you see my point?
    Sure, if I go somewhere other than home, I’ve got to pay the taxes voted into law by the people who live there – but so do they. Property owners get to have a say in the taxes that they have to pay on their properties. Car renters? NO say, and nobody but them has to pay it. I hope this is clear now.

    As for choosing not to go there – that is often just not an option. It’s an unfair imposition. Example: my son is currently at Army basic training in Oklahoma. I’m going there to see his graduation in a few weeks. I’m going to have to rent a car, because the base is far from the airport and there’s no public transportation option that will work for me. So I’m stuck having to pay whatever taxes the people of Oklahoma City have voted on, to stick it to us renters so they can have their sports arenas or whatever they want to use it for.

    So if I don’t want to get soaked by these taxes that got voted in by people who don’t have to pay ‘em, then…what…I have to miss one of the biggest days of my son’s life?

  • Eric

    I understand the view of people who think the feds shouldn’t dictate to local governments on this issue. So here is my solution.

    The federal government should require every municipality that charges these types of fees to create a full-disclosure web-page detailing EXACTLY what those fees are used for. If a $2 excise charge if going paying for a new stadium, the local government must reveal this to the traveling public in no uncertain terms. Rental car companies could then link to this page on the reservation form. So the rental car customer could see where his taxes and fees are going and then decide whether he wants to make the reservation. This is about the consumer’s right to make an informed decision.

    The cities could levy any fees they want, but they are going to have to come clean to the traveling public about where that money is going. Mystery excise fees aren’t going to cut it any more.

    My guess is the local governments won’t like this either, because once travelers find out that they’re paying for an NFL stadium they’ll never see, that area’s tourism will go right down the drain.

    I used to go to NW Florida every September. I don’t anymore because the rental car literally costs more than the plane ticket in Pensacola.

  • Carver

    @Leeanne

    Then to my other point, don’t do business in that state if you don’t like the taxes that are imposed. Going to that state is a matter of choice and convenience. Neither of which justifies federal intervention

  • BillC

    If travellers do not like paying taxes that apply only to visitors they should stop visiting places that do this. Eventually the city or county or whatever will notice the drop in revenue and will either lower or drop the tax. If the local goverment does not notice the businesses certainly will and they will let the politicians know about it quite quickly. There are more than just taxes on rental cars, as an example there is usually a hotel tax.

    Having the federal government interfere in the budget process of a municipality is outrageous.

  • Flyer

    @Eric
    I’d agree with that.. I have NO issues with transparency.. that is making it KNOWN, in advance, what is and is not being taxed, who is the taxing authority, and where those tax dollars are going..

    So long as that disclosure doesn’t also come with rules about the taxes themselves, I’m on-board with that..

    I DO think that the best defense is knowledge– know what is being taxed, to what extent and why.. From there you can make an informed consumer decision as to how you choose to expend your dollars., if you find it wrong on any level you are free not to use that service– ergo not pay the tax.

  • Heather

    Taxation without representation??? While I agree with the
    consensus that taxing the visitors to fund city projects is
    wrong and unethical, or just to rip off the visitor, the argument of “no taxation without representation” is ridiculous.

    By that measure, anytime we step across state lines and make a purchase, we would show our out-of-state
    drivers license to be exempt from paying their sales tax????

    As far as ‘boycotting’ a certain city, etc because of these
    ‘you pay for our projects’, sometimes a city can’t be avoided…visiting family, business travel, unique
    travel locations (disney world anyone?) …that won’t work
    either. Even if we could avoid certain locations, when
    they ALL do it, you can’t avoid the added taxes. Sound
    familiar? I have not taken a airplane trip since they
    started nickel and diming the public. We have no choice..
    this time the choice being reasonable-alternative transportation. I drive, don’t go or take the auto-train
    (valid only from VA to Florida)…which by the way is more
    expensive BUT, guess what….no airline fees/taxes and NO
    rental car ripoffs, scams or public works project taxes. I
    would rather give more money to AMTRAK than the
    money-sucking alternatives.

  • http://www.drbilltoth.com/blog Dr Bill Toth

    ultimately it is taxation without representation because the tax is being applied in most cases to those who have no opportunity to vote for or against it. Often the taxes nearly double the cost of a rental.

  • Jerry Mandel

    1. Leanne is wrong. Renters do pay property taxes. It is part of the rent and the lessor includes that expense in deciding on the rent charge amount. 2. Even worse is the cities that charge the airport facility fees even when the flier goes elsewhere in the city to rent a car within 24 hours of arriving.

  • Nobody

    Taxation without representation?! Local add-on taxes to pay for a new pseudo government stadium or convention center are always put to the vote around here. Voters have no problem approving another 5% add-on on car rentals or hotel stays if there is a threat of an increase in income, property, sales tax on them.
    The ones that vote against the additional taxes are the evil businesses that want to keep all the money for themselves. The tax is put on their hotel to pay for a new convention center with a new, competing hotel owned by a juiced-in group that not only wants to keep all the money for themselves, get other people’s money to build the money center.

    He had a money-making, tax-paying, decent hotel
    Convention Bureau wanted new center with monorail!
    Lost business as renters went to the next town
    To avoid the surtaxes for a center they’ll never be around
    One more insult: blighted and bulldozed by eminent domain!

    RIP
    Nobody was faster

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  • Skiguy777

    Taxes are more than the rental itself.  

    I used to rent a car to see relatives 300 miles away.    Now I use my car instead.