Having Their Tax and Eating It Too

This editorial is presented by the American Car Rental Association.

The car rental industry, and more importantly, its consumers, have long been targeted by politicians following the “public funding” path of least resistance in the form of discriminatory car rental excise taxes.

We in the industry already know car rental excise taxes to be bad policy for a number of reasons, but we have a new one to add to that list. While this “taxation without representation” is unduly burdened on the unsuspecting visitor to a city, apparently the government is agreeable to a new form of entitlement to private parties and can “lift a loser” at our consumers’ expense.

In the Oct. 1, 2007 edition of Forbes magazine, an article entitled “Lifting a Loser” articulates how the Arizona Cardinals, now playing in a new stadium built with the help of funds collected via a 3.25 percent surtax on all car rental charges, have increased in value over 13 percent ($102 million) in the past year. How, you ask? Easy. The team only pays $250,000 in rent and has shown a 20 percent improvement in revenue because of the skybox rentals the new stadium has generated. This is a vast improvement in operating expenses and a windfall of new revenue, all thanks to the new stadium and its corresponding lease terms.

It’s bad enough that the 3.25 percent surtax exists, but why should the owner of the Arizona Cardinals be entitled to a $102 million increase in value of his franchise at the expense of our consumers, the majority of which are out of town guests having been unfairly burdened with picking up the tab? Were our customers afforded any goods and services by the Cardinals in return for their forced contribution?

More importantly, with a plethora of stadiums built and being built by car rental industry consumers, why is this money not being diverted into tourism promotion which would benefit not only the nationwide economy, but would make the U.S. more competitive as a destination in fighting for the overall tourism dollars spent worldwide?

The concept of taxing a visitor is not new. Many years ago, bed taxes were started to fund convention and visitors bureaus efforts to bring more tourism and conventions to the city. These taxes on visitors directly funded these efforts. In other words, the money collected was directly put back into the efforts to bring more people back to that same city.

Now the car rental industry is apparently “charged” with collecting surcharges and taxes nationwide to fund athletic stadiums all over this great nation in order to help a city keep a team from moving. While the concept alone should be challenged, as a very small percentage of car renters use these facilities, now it is apparent the owners of the sports franchises—not the cities themselves—are the real bread winners.

It is an interesting concept that city commissioners are taxing their visitors to make one of their constituents very wealthy. This is just wrong. As the article suggests, Mr. Bidwell has received a massive increase in the value of his team at the expense of the consumers. We suggest Mr. Bidwell should be entitled to an increase in value if his team performed well, not by taxing unsuspecting visitors.

We would suggest if this type of tax is deemed to be acceptable to the American public, than maybe Mr. Bidwell should make a corresponding $102 million investment in road improvements, money for schools and education, food for the homeless and to promote tourism which in turn brings more visitors back to Phoenix, or any one of a hundred other very needy projects the citizens of Arizona need.

Ironically, the concept of “taxation without representation” developed in a little war in the 1700’s to get us out from under British rule. The New England Patriots play in a stadium built in 2002 with no taxpayer funding, yet the team performs exceptionally well, and their value goes up accordingly.

We would suggest because the people of New England remember their Patriot ancestors’ struggle and their fight for freedom from “taxation without representation.” Maybe the citizens of Arizona should have let this cardinal “fly the coup,” because all the Bidwell family did was take $102 million that others paid with no benefit to the citizens. What a travesty.

The American Car Rental Association

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