As a general rule, rental taxes that fund activities that benefit our industry, or, more importantly, our customers, are generally OK in ACRA’s view. 
 -  Photo courtesy of Photo YourSpace/Flickr.

As a general rule, rental taxes that fund activities that benefit our industry, or, more importantly, our customers, are generally OK in ACRA’s view.

Photo courtesy of Photo YourSpace/Flickr.

As a new Congress convenes in 2019, the staff and board of the American Car Rental Association (ACRA) have received questions from members about ACRA’s ongoing efforts to curtail discriminatory taxes on car rental customers. William Plamondon, president of the American Car Rental Association Board of Directors, provides an update and outlook on this initiative.

The American Car Rental Association has stated that “federal legislation fully prohibiting all discriminatory car rental excise taxes remains a priority for 2019.” Why is this a priority for ACRA?

Bill Plamondon: The erosion of our value proposition through discriminatory taxation is simply unacceptable. In 2018, travelers once again rated rental cars significantly ahead of hotels and airlines in customer satisfaction, according to JD Power & Associates. A big part of this is recognition of the value offered by rental car companies: quality vehicles at agreeable rates. And so, when those rental car customers get singled out by government entities to help fund projects unrelated to airports, thus raising the cost of renting cars for all of our customers – local, business and leisure renters – ACRA will continue to be at the forefront of opposing these taxes.

But didn’t the excise tax amendment to the Federal Aviation Administration reauthorization bill, passed into law in October 2018, finally put an end to these taxes?

BP: Enactment of the amendment was conditional on the completion of a study by the Government Accountability Office (GAO). So, for now, and until the GAO study iscompleted, the FAA bill’s car rental excise tax amendment will put an end to certain discriminatory taxes – but not all. For example, the amendment precludes any new taxes on any transactions at airports, including rental cars, unless all funds raised from the tax are used solely for airport infrastructure or operations. But, the law allows existing airport car rental taxes to remain in place, and off-airport rental car transactions remain fair game for new discriminatory taxes going forward. So, even if the amendment ultimately is endorsed by the GAO study, we may well see new rental car taxes being discriminatory with respect to customers who rent off-airport, and those mobility platforms that serve them.

The FAA bill was passed in the Senate 93-7, a sign of rare bipartisan support, and was signed into law by the president with little or no opposition. So why do you suggest that the amendment regarding airport transaction taxes might not holdup?

BP: As noted above, the 2018 excise tax amendment is conditional on a GAO study assessing its short- and long-term impact on federal airport funding. Until that process is complete, there exists the possibility – however slim – that the amendment may be challenged, revised, or even repealed by Congress. If Congress does decide to repeal the 2018 amendment after receiving GAO report, then that means that non-airport-related municipal, county and state projects will continue to be funded over the backs of airport rental car customers. However, in ACRA’s view, the 2018 amendment doesn’t impact federal airport funding positively or negatively – it simply discourages mayors, county councils and states from imposing discriminatory car rental excise taxes at an airport and then moving that money off-airport for non-airport related projects. ACRA will be involved deeply in the GAO study process and is optimistic that the GAO’s conclusions will support the amendment.

While many might agree that sports arenas and other such municipal facilities should not be funded solely by rental car customers, some of these airport transaction taxes seem to go toward very laudable and worthy non-airport projects, such as police training. Doesn’t that benefit airport rental carcustomers? In other words, is there such a thing as a good rental car tax?

BP: It’s not a matter of good or bad, it’s a question of fair or unfair. If all travel-related transactions are being taxed, and not just rental cars, then ACRA may not oppose them, particularly when there may indeed be a benefit to travelers. But ACRA still believes that even this is short-sighted, since growth in travel and tourism continues to outpace the U.S. economy as a whole; municipalities and states should promote travel, not put up barriers in the form of more and more taxes and fees.

As a general rule, rental taxes that fund activities that benefit our industry, or, more importantly, our customers, are generally OK in ACRA’s view. The most acceptable taxes are the broadest-based taxes that have the least harmful impacts on our customers. The worst taxes are those that target our customers for purposes that havenothing to do with their interests.

So what will ACRA be doing in 2019 on this issue?

BP: We applaud Congress for a step in the right direction of protecting our airport customers from such discriminatory taxes. ACRA will continue to monitor proposed or pending rental car transaction taxes and fees, and we will continue to vigorously oppose those that are discriminatory in nature. We also will be closely engaged in the GAO study process with respect to the FAA excise tax amendment, and will be proactive inencouraging its support so that Congress finds no reason to repeal the amendment.

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