Newark Car Rental Tax Funds Unrelated Programs

A rental car tax at New Jersey’s Newark Liberty International Airport is helping to fund an animal shelter, a park and a jobs program in Newark, according to a report by The Wall Street Journal. The car rental tax is 5%.

“It’s hard to get these projects built,” Adam Zipkin, former director of economic and housing development for Newark Mayor Cory Booker, told The Wall Street Journal. “Without the rental-car tax, there was no other pot to make up that difference.”

New Jersey lawmakers passed an economic stimulus act in 2009, which allowed cities to enact a tax up to 5% on airport car rentals — Newark and Elizabeth were the only New Jersey cities qualified to impose the tax, according to the report.

Avis Budget Group and Hertz Corp. sued Newark in Essex County Superior Court to stop the rental car tax. They argued that the tax went against the U.S. Constitution’s Commerce Clause, which gives Congress the control to regulate trade among the states, says the report. A trial court disagreed with the car rental companies.

After this court ruling, Newark’s council distributed $12 million (from the tax) to initiatives to clean up empty lots and fund the city’s economic development corporation. In addition, $3 million was put toward Newark’s $639 million general budget, says the report.

“It’s always perceived to be easier for politicians to stick it to out-of-town travelers who will never use the service they are now paying for than to have the courage to face their constituents and ask them to foot the bill,” Richard Broome, executive vice president of corporate affairs and communications at Hertz Corp., wrote in an email. “That doesn’t make these taxes right or good public policy.”

Click here to view the full Wall Street Journal article: http://online.wsj.com/news/article_email/SB10001424052702303370904579296551900603872-lMyQjAxMTA0MDIwMjEyNDIyWj

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