Weekend survey: Should we limit car rental taxes?

If you’ve rented a car recently, you know that the difference between the “base” rate and the final price can be 40 to 50 percent higher. What’s with all the extras? They’re fees, surcharges — and taxes.

The car rental industry wants to limit the taxes a municipality can impose on a rental car, calling it “taxation without representation.” Cities, on the other hand, say they are providing important services for those taxes, like building roads, bridges and the occasional sports stadium.

Question is, should Congress step in and block new taxes? A proposed new bill would do just that. What do you think? Is that correct, or is this a case study of overreaching federalism?

Here’s the survey.

Here are the results.

And a follow-up question: Do you have any stories about having your car rental bill double (or more) because of taxes? Ever tried to do something about it, like complain to the city?

Share your feedback by sending me an email or commenting.



  • http://www.thetravelinggiraffe.com Crissy

    I’m voting yes not only because I’m sick of the crazy taxes, but because I think municipalities are relying too much on income from travelers, which will hurt them if travelers stop coming. I think many places are becoming too reliant on visitor dollars, which might not always be there. They need to be more self sufficient.

  • CTP

    I voted no, because I am always given an estimated total that includes taxes when I rent. I find that in reality the final total is often a few dollars less (under $20) than the estimated cost given to me at the time of the reservation. These taxes are not hidden, nor are they a surprise received at the end of the rental (like the resort fees in certain hotels for example). I rent either directly from the rental car agency’s online site (Avis, Hertz, Budget, etc) or through my corporate travel agency and never through sites such as expedia, rental cars.com, priceline, etc

    CTP
    CTP

  • Bill

    Some amount of taxation is appropriate, but it should be limited to no more than what they are taxing their own citizens for the same service. Not sure how you would do the accounting, maybe by car year. But now out of towners are an easy target with no way to defend them(our)selves.

  • Lowcarb

    I vote no.
    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.

    I live in a town north of New York City. It is not uncommon for a Manhattanite to take the train to a northern suburb and then rent a car there to continue on for their weekend travel. The lower rate and lower taxes you get out side of NY City more than makes up for the train fare. Add to that you don’t have to hassle with city traffic and bridge tolls.

  • MarkieA

    @CTP

    So, as long as they TELL you that they’re ripping you off beforehand, you’re OK with it? Because, in this instance, you’re not going to get away from the municipal taxes no matter what rental car agency you use – unless of course you don’t travel to that particular city

  • Heather

    Limit taxes? No
    Limit fees and surcharges? ABSOLUTELY!!

    Just like the airline industry, the car rental industry uses the fees and surcharges to keep as much money as possible without anyone having to pay taxes on them. Either make the fees and surcharges taxable or outlaw them!

  • Mike Z

    I voted yes, not because I want the government interfering more with my life, but because taxing the rental agencies, and specifically even moreso with airport locations, there is 100% taxation without representation going on here. if the general public had to pay the same taxes everywhere they went, I am sure the taxes would not be so high.

    And I don’t buy the “roads and bridges” argument one bit. There are specific taxes in place that go to pay things like that. why should someone who rents a car pay an even higher percent in that local community when they are only visiting? if anything, make the locals pay higher taxes!

    It is all about fleecing the visitor who cannot vote. if I had one wish in life that I could not use on myself, it is that people like Bill gates not use his billions for charity, but instead to get these elected officials all over the US ousted. (the ones who impose these taxes)

  • http://www.JustLetMeVent.wordpress.com jaygee

    It would be inappropriate for Congress to make this decision. It needs to happen closer to home. However, if Congress would adequately fund the Highway Trust Fund and stop using that money for things other than road/bridge construction/repair then perhaps municipalities could spend their tax money on other more appropriate services for travelers and the local community.

  • Tina

    I voted no. The federal goverment has bigger issues it “should” be handling. These things tend to work themselves out. Higher taxes on tourist = less attaction to rent/travel there. Hopefully the city officals can draw the connecting line when they increase taxes and see a reduction in usage.

  • Brian

    I voted Yes because I think cities are abusing much of the income they get from these taxes and surcharges. If a city or state wants to maintain roads, build sport stadiums, among others; sales tax and income tax pay for that. Most city politicians claim that these taxes and fees are used to maintain roads and/or build sport stadiums. But the reality is that they are just pocketing the money for themselves and think they can get away with it since no one would dare challenge them. I think car rental taxes should be confined to state sales tax and airport taxes (if applicable) and that’s it. If a city can’t generate the necessary revenue any other way, then too bad.

  • Arizona Road Warrior

    The University of Phoenix Stadium (the home of AZ Cardinals) was funded by a surcharge on car rentals and a 1% tax on hotels within Maricopa County. The voters voted and it passed 52% to 48% in the 2000 election. The money (car rental surcharge and 1% hotel tax) went to the Arizona Sports & Tourism Authority.

    It was reported in the local newspaper that the Arizona Sports & Tourism Authority collected their contribution ($ 300.4 MM) of the funding for the new stadium before the construction of the stadium was started in 2003. I don’t know if the tax and surcharge are still around but I knew that it was around for at least three additional years after they already raised the necessary funds for the stadium.

    A few minutes ago, I went to the Hertz website to check on a rental rate at PHX. The fees and surcharges were 28% of the total rental (a 3-day rental). I have rented cars where the fees and surcharges were 30% to 40% of the total rental. Also, I have stayed at hotels where there were three to five line items on the bill for taxes.

  • Thomas

    I recently rented a car at ATL for a week. When I returned the car, the taxes and surcharges were more than the rental price. I VOTE YES !!!!!!!!

  • Jim_J

    @jaygee The overwhelming majority of the funds raised by
    these taxes and fees does not go to build better highways. An
    example would be Boston’s $10 surcharge on all car rentals at Logan
    Airport. All of that money goes to support the Hynes Convention
    Center. I am a frequent traveler to Boston and have rented many
    cars there but have never set foot inside the Hynes Convention
    Center. What does the Convention Center have to do with the car
    rental business? It is located in the Back Bay area – about a 20
    minute cab ride from the airport with normal traffic. The majority
    of air travelers using the convention center will take a cab or use
    public transportation to get from the airport to their hotel and to
    around town. It is also worth noting that the vast majority of
    people flying into Boston-Logan and renting cars are not going to
    Downtown or Back Bay. Their destinations are usually the Boston
    suburbs, Cape Cod, New Hampshire and Maine. Is it fair to tax these
    people to support a facility that they will never use? I think not
    and therefore voted yes on the survey.

  • BillC

    I voted no because I don’t believe more government regulation is the answer. It is up to businesses to take this up with the municipality. Renters can speak with their wallets.

  • DJP

    The problem really is all in or none in scenario. Because Minneapolis does it to travelers then Chicago does it…and so on.

    I do understand taxes that pay for airport use and relative rental car mileage use.

    A boader brush on this covers the entire travel industry whether its cars, hotels, or restaurants…all if they are in a certain zone need to pay taxes to help pay for a neighboring facility.

    I accept something like stadium taxes charged at restaurants neighboring the new baseball park built which is this bringing much of their business. This is more of a use or direct benefit type of tax.

    There are places in cities across the country that even locals going to restaurants which happened to fall in a certain area must pay some sort of extra tax either for a stadium or airport, or for the city itself.

  • Ed

    I had to vote no because I’m a little afraid what else congress may step in and take control of. I have the sinking feeling that we are about to take our first step of many on this slippery slope of government control.

  • Natalie

    No. In principle, I don’t believe in further regulation that hamstring’s a municipality’s ability to run itself. Perhaps it’s because I’m from California, where so many onsie twosie laws are on the books that collectively prevent the state from being able to raise the funds it needs to provide for the population. I know it’s much more complicated than that, but still.

    Plus, I think you need more information to be able to answer the question, such as provide for what consequences would come from preventing those taxes from rising. It’s easy to ask someone “hey, you don’t want to pay higher taxes do you?” It reminds me of the signature collectors that stand outside of grocery stores that will ask people if they hate sex offenders and get them to sign a petition for legislation that they really don’t know anything about and may not have the result they desire.

  • Scott

    I vote Yes, but from a different prospective. The rental tax is supposed to be for “travelers” but the rental tax also applies to anyone who rents a vehicle.

    If your car is in the shop and you get a rental, you are not a visitor, but you are paying the same taxes that a visitor does. ( This is different from the airport tax that rental companies have to charge for the hugh fees that airports charge them to come on their property and pick up the passengers).

    Visitors may stay a day or a week but some car repairs can take a month or longer. So residents who pay for those “roads and bridges” in their property taxes are paying them AGAIN when they rent a car.

  • mikki

    Indeed. It was a shocker to rent a car in Phoenix – paid for online and up front – only to find out that the taxes were not included. That, for whatever reason, had to be charged locally at pickup. The car rental price was $34. The taxes added on were $72. If I’m going to pay that kind of money, I want to see something for it. Gee whiz.

  • BucksterSF

    Limit the car fees and other “fees” go up. Residents will always vote to increase them because they don’t have to pay them.

  • Tom

    Maybe the answer is for one state or city to catagorically eliminate these taxes and advertise the fact. If Florida, for instance, announced that there were no longer going to be any taxes on car rental and tourism subsequently boomed at the expense of places with high taxes, lawmakers would get the point. If tourism didn’t increase, they would get the alternate point — that nobody cares.

  • http://www.best-car-rental-tips.com Paula

    I agree that these fees need to be curtailed. Tourists should not have to pay for a facility (such as a stadium) that they will probably never use!

  • Jasper

    Congress should not be telling states and counties how much taxes they can levy. That is not their business.

    Congress however, within their ability to regulate (interstate) commerce, should be legislating that all vendors (rental places, airlines, telcos, fast-food places, insurance agencies, supermarkets) show the final actual price of the product, including all taxes, fees, surcharges; i.e. the amount of money you loose when purchasing the product. They may chose to inform the customer how much of that price consists of taxes, fees and surcharges.

  • Heather

    I voted yes. I would agree with a tax for stuff that visitors actually use, but in reality the only thing you can say is that they are using the roads, buying gas, and maybe using airport facilities if they rent a car. You don’t know where else that person is going or what they will be doing or even if they are a traveler and not a local who had a breakdown. It is a nice political ploy to offset taxes on people who don’t have a vote while touting lower taxes for all of your voters, but when it is so high and with little to no benefit to the actual traveler it is questionable behavior.

  • Brooklyn

    I am soooo tired of the different states behaving as if they were different countries! We live in one country and we should be able to travel from state to state without “gotchas”, whether it’s the speed limit, bridge tolls or hotel and car rental taxes. Big government? No, just ONE government with even-handed treatment for all.