House Bill Introduced to Prohibit Excise Taxes

A diverse coalition of consumer organizations, travel associations and car rental companies announced on May 25 that they support H.R. 2453, which prohibits future discriminatory car rental excise taxes and protects the rights of all car rental customers.

Introduced yesterday by U.S. Representatives Rick Boucher (D-Virginia) and Chris Cannon (R-Utah), H.R. 2453 would prohibit future state or local discriminatory excise taxes on car rental consumers. Original co-sponsors are Rep. Dan Boren (D-Oklahoma), Rep. Russ Carnahan (D-Missouri), Rep. Steve Chabot (R-Ohio), Rep. William "Lacy" Clay (D-Missouri), Rep. Jim Jordan (R-Ohio), and Rep. John Sullivan (R-Oklahoma).

The bill would not affect standard state or local sales taxes, vehicle license fees or customary airport-related fees. In addition, the bill's provisions would not apply to any car rental excise taxes that were enacted prior to the bill's effective date.

Currently, there are nearly 100 car rental excise taxes in 42 states and the District of Columbia. These discriminatory taxes require car rental customers across the country to fund an array of projects and programs that have no direct connection to renting a car, nor confer any special benefit to car rental customers.

In fact, car rental consumers have been forced to pay at least $6 billion to state and local governments (on top of the generally applicable taxes applied to goods and services) to fund unrelated initiatives like stadiums, highway construction projects, a performing arts center, a police and fire station, and even a sewage treatment plant.

As a result, a coalition, which includes the National Consumers League, has formed out of concern that more and more cash-strapped local governments are relying on car rental excise taxes to fund otherwise worthwhile civic projects. Furthermore, coalition members are encouraging municipalities, counties and states -- as they carry out their critical role in protecting consumer and citizen rights -- to extend that protection to all constituents, including car rental customers.

"These taxes, which cost consumers hundreds of millions of dollars annually, are discriminatory and regressive," said Linda Golodner, president and CEO of the National Consumers League. "They also impose a burden on consumers traveling in the nation's interstate transportation system."

When state and local lawmakers -- even under the guise of "states' rights" -- enact car rental excise taxes as a politically expedient means of shifting the tax burden to out-of-state renters, they interfere with the well-established principles of interstate commerce. Historically, Congress has prohibited unfair practices by state and local governments that unreasonably burden against interstate commerce and transportation. Examples include the "4R" Act (1976), the Airport and Airways Improvement Act (1978), the Motor Carrier Act (1980), and Bus Regulatory Reform Act (1982).

The "Coalition Against Discriminatory Car Rental Excise Taxes" also includes the National Business Travel Association (NBTA) and the American Society of Travel Agents (ASTA) -- as well as the American Car Rental Association (ACRA), the Truck Renting and Leasing Association (TRALA), and all of the major car rental companies such as the Avis Budget Group, Dollar Thrifty Automotive Group, Enterprise Rent-A-Car, Hertz, and Vanguard Car Rental USA (parent company of National Car Rental and Alamo Rent A Car). The car rental companies believe it is critically important to speak up on behalf of their customers because excise taxes are blatantly unfair not only to out-of-towners, but also to local consumers and businesses.

NBTA executive director and COO Bill Connors agrees. "Politicians have come to see the pockets of car rental customers as 'magic pots of gold' they can reach into any time there is a stadium, arts center, or other unrelated project to fund," he said. "Their actions are the result of a myth that they won't hurt anybody but a few one-time visitors. The reality is this -- by unfairly targeting one group of consumers these taxes hurt local economies in two ways. First, for those visitors who do rent cars, the taxes make a city or county less attractive as a repeat destination. Second, they create a hidden tax on local citizens and businesses who make up a significant portion of the car rental customer base."

Last September, the U.S. Travel & Tourism Advisory Board likewise noted in a special report -- titled Restoring America's Travel Brand: A National Strategy to Compete for International Visitors -- that "despite billions of dollars paid by car rental companies and customers in excess of normal taxes, there is no special benefit to rental car customers from such special venue taxes nor is there a direct connection between renting a car and using the public facilities or programs the taxes fund."

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