Discriminatory Travel Taxes and Fees
The Issue: As state and local governments face increasing budget deficits and decreasing tax revenues, officials eye new revenue sources to meet shortfalls and fund pet projects. An “easy” option is the imposition of new taxes on rental cars, hotels, restaurants and airlines as they are viewed as traveler taxes rather than voter taxes. A stark example is the proliferation of rental car taxes – over 118 taxes in 40 states and the District of Columbia.
Higher taxes deter the business travelers who generate and spend billions of dollars for local and state governments. A GBTA Foundation analysis of the top 50 U.S. travel destinations in 2012 found that discriminatory travel taxes and fees on travel-related services result in average increased cost on visitors of 56% over general sales taxes. Travel buyers and meetings planners understand the tax disparities among the different destinations and the impact on total travel spend. Ironically, higher taxes negate efforts of tourism bureaus, Chambers of Commerce, and business interests working hard to attract business travelers who spend money on hotels, rental cars, restaurants and conferences. Often these traveler taxes are used to fund local projects completely unrelated to tourism and business travel, like sports stadiums and museums.
GBTA Position: GBTA opposes these discriminatory taxes, testifying in support of a bill to stop further rental car taxes. Business travelers should not be forced to pay discriminatory state and local taxes to fund state/local projects completely unrelated to business travel interests. In the past, Congress has prevented discriminatory local taxes on air, bus and train tickets. Most recently, the House passed legislation prohibiting discriminatory taxes imposed on mobile services. Congress should afford similar protections for hotels and car rentals.
GBTA Video Advocacy and Fair Taxes
GBTA Reveals Best and Worst Travel Tax Cities
GBTA Testimony before Judiciary Committee Hearing