Senators Introduce Bill to Curb Rental Car Taxes

U.S. Sens. Mark Kirk (R-Ill.) and Richard Blumenthal (D-Conn.) have introduced S. 1164, the Ending Discriminatory Rental Car Taxes on Automobile Renters (EDSTAR) Act, to prohibit states from imposing new taxes on rental cars. These taxes often add up to more than 40% of the cost of renting a car in the United States.

Since 1990, more than 100 special car rental tax rates have been enacted in 43 states and the District of Columbia, costing rental car consumers more than $7.5 billion.

A recent U.S. Travel Association survey found that 49% of travelers have cut back on travel plans due to high costs and travel taxes. This effect is felt throughout the hospitality, manufacturing and sales industries in Illinois and throughout the country.

"High rental car taxes are causing tourists to cut back on travel which, in turn, hurts the 563,000 jobs in Illinois that rely on the hospitality industry," said Sen. Kirk. "Rental car taxes have cost consumers more than $7.5 billion since 1990. This bill provides needed tax relief and more accurate pricing of rental cars.”

"This bill will eliminate an egregiously unfair tax, burdening an industry significant to Connecticut and help drive tourism, jobs and economic growth,” said Sen. Blumenthal. “Rental car customers should not face such discriminatory taxation; rather, they should be provided with the same protections already granted to airline, train and commercial bus customers.”

For more than 35 years, state and local governments have been imposing discriminatory taxes on rental car companies and their customers. Though it is commonly assumed that these discriminatory taxes affect out-of-state customers and those traveling, a majority of rental car users are in-state and 41% of rental car taxes are paid by households earning less than $50,000 annually.

Congress — pursuant to its constitutional authority under the Commerce Clause — has enacted protections for other interstate travelers such as airline, train and bus passengers. EDSTAR would close a loophole in federal law by extending these enacted protections to rental car consumers.

The bill’s original co-sponsors are Sens. Roy Blunt (R-Mo.), Jerry Moran (R-Kan.) and Pat Roberts (R-Kan.).

Many organizations support S. 1164, including Advantage Rent A Car, American Car Rental Association, American Society of Travel Agents, American International Automobile Dealers Association, Enterprise Rent-A-Car, Global Business Travel Association, General Motors, The Hertz Corp., Avis Rent A Car and Ford Motor Co.