Serves the Commercial Small Fleet Market of 10 – 50 Vehicles

Travelers Hit with New Taxes on Rental Cars

November 9, 2005

Despite low car rental rates, a host of new local taxes, including some that may take effect before the busy holiday season, will soon make it more expensive to rent cars, according to the Wall Street Journal.The overall taxes range from 0.8 percent of the bill to $10 per rental, and are being used by local governments as a way to raise funds for stadiums, museums, monorail systems, and rail lines.The flurry of taxation is being partly blamed on the fact that the rental-car industry’s trade association was dissolved in June, leaving it with no effective lobby. As a result, there were 44 rental-car tax proposals that were either pending or approved by local governments as of this August. In comparison, there were only three on the books in the beginning of 2004.Increases began last year in Kansas City, Mo. when the city passed a new fee of $4 per day on cars rented within city limits to fund a new sports arena. Officials in Arlington, Texas followed suit in April of this year, by imposing a 5 percent tax on cars rented in the city to fund a new stadium for the Dallas Cowboys, the Journal story said. There is some good news for people who rent cars, however, since the average one-day price of midsize car booked a week in advance is now $47.61, up from $44.32 at the same time last year, but down from $50.91 two years ago. Since a majority of car-rental taxes are assessed at airports, many travelers have begun renting cars in airports, cities, or off-airport locations that have lower or no taxes at all.The fear of possibly losing business has caused the rental-car industry to belatedly band together to fight the tax issue. In August an Enterprise executive discussed the tax issue while addressing the industry’s annual convention in Las Vegas, and Hertz Corp. and other firms have joined together to hire lobbyists.
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