NBTA has joined a diverse, broad-based group — whose members have never worked together before — representing the views of local consumers and businesses, the car rental industry, tourists and tax experts.
NBTA has joined a diverse, broad-based group — whose members have never worked together before — representing the views of local consumers and businesses, the car rental industry, tourists and tax experts. They share a common concern: the dangers of an increasing reliance on car rental excise taxes. Why should you care? Because car rental excise taxes are bad for consumers and businesses — and the communities in which they reside.
Did you know? Car rental taxes have gone to fund a performing arts center, a police and fire station, a sewage treatment plant and a sports arena — a sports arena without a team, I might add! That's despite the fact that rental cars represent less than 1 percent of all registered vehicles nationwide.
Since 1976, more than 95 car rental excise taxes have been enacted, with dozens more under discussion throughout the country. Car renters specifically have been asked to cover the costs of 18 stadium and sports venue projects. At least 17 more are under consideration.
Even more telling, car rental excise taxes have cost consumers and businesses well over $5.9 billion since 1990. Yet, there is no special benefit for car rental customers, nor is there a direct connection between renting a car and using these public facilities or programs.
Many legislators across the country are forcing car rental customers to fund an array of unrelated projects and to carry a disproportionate share of the financing burden. Such arbitrary taxation is blatantly unfair not only to out-of-towners, but also to local consumers and businesses. It also violates what economists call the "benefit principle," which holds that tax burdens should be assigned according to the benefits that taxpayers receive.
As a result, federal legislation is needed to prohibit discriminatory car rental excise taxes — and to protect the rights of consumers and businesses, whether they rent cars out of state or in their own hometown.
Local Action
Some of you may ask, what can we do to make a difference?
The Wisconsin Business Travel Association, working in conjunction with Shane Downey, NBTA's government relations specialist, was successful in defeating a proposal calling for a car rental tax increase from $2 to $15 to pay for new commuter trains to link Milwaukee to its southern suburbs, Racine and Kenosha. The supporters of the plan framed the proposal as a tax on business travelers and tourists with little impact on the local communities. This myth was quickly rebutted by members of WIBTA, including Don Draves of Miller Brewing Company, who determined the cost effect by multiplying their local rental activity by 15. The results made clear the fact that this 650 percent increase was a hidden tax on businesses and would significantly impact their companies.
WIBTA members, led by their president, Laura Lane, sent numerous communications to the state legislators and to local newspapers opposing the tax. Lane even met with the editors of a local newspaper to discuss the impact the tax would have on local businesses.
NBTA again went to work in my hometown of Pittsburgh, to fight a proposal that would give Allegheny County the highest car rental tax rate in the state. Downey and Bill Connors from NBTA worked with the Pittsburgh Business Travel Association (PBTA) to help educate local officials on the impact of this tax. Paul Lang from Bayer Corporation and local Enterprise Car Rental executives had the opportunity to provide testimony to the local county council.
I was a guest speaker on Pittsburgh's largest talk radio show; since I not only had the opportunity to go over key talking points that NBTA provided but also was able to say hello to Mom (who listens to the show religiously). It was a great experience! What made our efforts even more interesting is the proposed car rental tax was combined with a drink tax so we found ourselves aligned with a very vocal restaurant association.
Pittsburgh, like many other mid-market cities, is in competition for convention and meeting business, which attracts thousands of travelers to our city each year.
While we were not successful, the vote was extremely close. My own involvement through the PBTA made me realize that we can make a difference by putting a face on these taxes.
The Best Solution
Government officials need to understand that the best way to truly fix fiscal problems is to do what most taxpayers and corporations do every day, which is live within their means.
Everyday, elected officials and their staffs make decisions that can affect our community, our company and our industry. As a travel industry professional, I strongly encourage you to help educate your local officials on these discriminatory taxes. All politics are local and all of us in the travel industry need to make sure our voice is heard.
Sean J. McCurdy is first vice president of the Pittsburgh BTA and an Allied member of the Board of the National Business Travel Association. Professionally, he is global director of worldwide sales of Interstate Hotels & Resorts.