On Feb. 28, California’s San Mateo County Board of Supervisors unanimously approved putting three taxes on the county’s June 5 ballot — all of which would affect the travel industry. The proposed rental car tax would put a 2.5% tax on gross receipts on rental car agencies and would generate an estimated $7.75 million in general fund revenues.
The other two tax proposals will ask voters to approve a 2% hotel occupancy tax increase and a new 8% parking tax.
The U.S. Travel Association (USTA) publicly announced its opposition to the ballot measures. “We understand that government leaders are facing tough budget choices in a challenging economy, but heaping more taxes on business and leisure travelers will only reduce overall travel demand,” said Geoff Freeman, COO of the USTA. “Fewer travelers hurt not only car rental and hotel companies, but hundreds of small companies who rely on visitors as an important source of business, endangering a powerful source of local employment and tax revenues.”
The San Francisco Travel Association attended the Feb. 28 meeting to show its disapproval of the resolution, and the organization’s CEO Joe D’Alessandro wrote in a SF Gate editorial, “I’m sympathetic to the financial difficulties local governments are facing. But taxes used to fund projects and programs benefiting the whole county should be applied across the general public rather than singling out a specific industry like tourism.” D’Alessandro added that the measures “are job killers.”
While this would be the first rental car tax imposed by the county, other California jurisdictions in the area have passed tourism-related taxes. According the USTA, travelers at the San Francisco International Airport (SFO), for example, already pay an 8.25% state sales tax on rental car transactions, an 11.11% airport concession tax and a 2.85% California tourism tax. If the 2.5% rental car county tax were added, the total taxes paid by rental car customers at SFO would come to 24.71%.
In a USTA survey in April 2011, nearly two-thirds of travelers surveyed (64%) said the total tax rate on rental cars is “much more” than they expected to pay compared to other travel taxes. And nearly seven out of 10 (68%) described hotel taxes as “high” or “very high.” Only 14% of surveyed travelers said “non-travel related expenditures” such as “contributions to government general funds” would be an “appropriate” use of travel taxes.
To read the Feb. 28 meeting document on the San Mateo County rental car tax resolution, see here.
For the full editorial by Joe D’Alessandro in the SF Gate, click on the URL: http://blog.sfgate.com/jdalessandro/2012/02/29/vote-no-on-san-mateo-county-visitor-taxes/