In San Mateo County, three travel-related tax measures will be on the June 5 ballot: T, U and X.
The new measures, if passed by voters, would impose a 2.5% tax on all gross receipts of car rental companies operating in unincorporated areas of the county, which includes the San Francisco International Airport (SFO) — or Measure T. The other two measures would approve a 2% hotel occupancy tax increase — or Measure U; and would create an 8% tax on parking at SFO — or Measure X.
In a new economic impact study of Measures T and U, a travel research firm found that the airport could lose 100,000 vehicle rentals a year if just one of these proposed tax measures passes. Released May 29 by Rockport Analytics, the report found that the county’s board of supervisors overestimated by 31% how much revenue the taxes would generate. The report says that the board’s analysis did not consider consumer reaction to higher prices.
The study also estimates that by raising the car rental tax, prices will increase, slashing demand that will cause a $3.7 million loss in annual revenues and will lower tax revenues by $2 million. As well, the proposed rental car tax hike would increase SFO’s total tax burden — taxes and fees on transactions and receipts — to 54.2%, the report found, saddling SFO with the second highest rental car tax burden among major U.S. metropolitan airports.
“SFO is a primary growth engine for San Mateo County as well as the broader Bay Area economy,” said the President and CEO of the San Francisco Travel Association, Joe D’Alessandro. “Singling out rental cars and hotels at SFO for punitive tax treatment will simply drive travelers to other airports — and they will take jobs, wages and spending with them.”
Study author Kenneth McGill, managing director of Rockport Analytics, stressed the study’s conservative estimates and said that a higher-tax reality could be even grimmer. “In today’s tight economy, consumers are highly sensitive to price increases, so the consequences of these tax hikes could be even worse,” he said. “New taxes could cut a family’s four-day stay to three, result in fewer meals in restaurants or less spending in local shops, or even result in a cancelled trip.”
According to the San Mateo Daily Journal, Enterprise Rent-A-Car and Hertz Corp. — both ACRA members — have donated almost $250,000 to the campaign cause, Taxpayers for a Strong Economy. The group in total has spent more $300,000 on professional services, polling, consultants, television air time and mailers to urge people to vote ‘no’ on the tax measures.