Across the country, state and local government officials seeking new or increased revenue streams keep proposing car rental excise taxes. Earlier this year, Colorado lawmakers endorsed a $2-per-day tax to fund transportation projects. In New Jersey – where car rental customers already pay a special $5-per-day state tax – city officials expressed support for another 5 percent tax on car rentals to boost local economic development. And, in Wisconsin, elected officials offered up a whopping $18 tax on each vehicle rental.
Unfortunately, this is not a new trend. In fact, local politicians have been blatantly and unfairly taxing car rental customers for more than 30 years.
“These discriminatory taxes have drained more than $7.5 billion from the wallets of car rental customers – all to fund special projects and programs all over the country that have nothing to do with travel or renting a car,” Andy Taylor, chairman and CEO of Enterprise Holdings, explained to the U.S. Travel Association last week.
Taylor – whose company owns and operates the Alamo Rent A Car, Enterprise Rent-A-Car and National Car Rental brands – was inducted into the U.S. Travel Hall of Leaders Dec. 3 for his role in challenging excise taxes that single out car rental customers to fund unrelated projects and programs in local communities.
Roger J. Dow, president and chief executive officer of the U.S. Travel Association, stated, “We selected Andy as one of this year’s honorees because of his strong leadership and passion on the taxation issue. He not only speaks out on behalf of many of our customers, but he also is setting a great example by articulating how important public policy issues can directly affect the travel industry.”
In all, the number of U.S. car rental excise taxes has tripled during the past 15 years, with more than 100 such taxes in place across 43 states and the District of Columbia. As a result, major car rental and car-sharing companies – along with travel industry, consumer, insurance, limousine and truck leasing organizations – have come together to establish the Coalition Against Discriminatory Car Rental Excise Taxes.
In his remarks to the U.S. Travel Association, Taylor pointed to five reasons why the Coalition opposes these taxes at airport locations and in local communities:
“Millions of people rent cars every week as their vehicles are being serviced or repaired after an accident – and these taxes arbitrarily inflate the cost of a replacement vehicle for consumers as well as insurance companies.”
“Rental cars are popular with consumers in major metropolitan areas who prefer to use mass transit – but then need other transportation options for weekend errands and getaways.”
“Car rental excise taxes are regressive. They are especially hard on local low-income residents who cannot purchase a vehicle of their own – but who can afford to rent one on an as-needed basis.”
“The majority of National Business Travel Association member companies spend at least half of their car rental budgets in their home markets – which pulls money straight from the bottom lines of companies from coast to coast.”
“Political marketing campaigns that target interstate travelers are an easy way out. Instead, local government officials should be enacting broad-based tax policies that spread the burden to all who benefit.”
Taylor stressed that such taxes can distort the free marketplace by transferring revenue from one industry to another, particularly when large construction projects are being marketed to the public. He warned those outside the car rental industry: “Elected officials who feel entitled to go after car rental customers will not shy away from finding other ways to target travelers to fund their pet projects.”
Taylor further emphasized that he did not intend to diminish the important role of local government authority, only that it was the travel industry’s right – and responsibility – to thoughtfully consider how financially strapped local governments continue to burden its customers.
“That is why I am so passionate about this issue,” Taylor said. “These taxes contradict our country’s democratic principles. They unfairly and arbitrarily single out one group of customers to fund a wide array of civic projects that benefit the broader community.”