Florida Governor Vetoes Car Rental Tax Surcharge

Published November 1, 2006

Florida Gov. Jeb Bush (R) has vetoed a bill that would have allowed local governments to impose a tax surcharge on car rentals.

The bill would have allowed an additional $2-a-day local tax on rental car customers. In his June 27 veto message Bush wrote, “These taxes will be paid disparately by tourists visiting Florida, consequently creating taxation without representation on a large scale. Philosophically, I cannot support this.”

‘User Fee’ Gambit

Several legislators who had signed a “no new taxes” pledge supported the car rental surcharge, arguing it was not a tax but a user fee, said Andrew Chamberlain, staff economist at the Washington, DC-based Tax Foundation.

“We’ve often warned against the trend among lawmakers toward re-labeling taxes as fees, allowing them to surreptitiously increase revenues while hiding increased tax burdens from taxpayers–violating basic principles of tax transparency,” said Chamberlain.

“If public projects are really worthwhile expenditures of taxpayer dollars,” explained Chamberlain, “it’s better to rely on broadly based revenue sources that distribute tax burdens equitably, instead of heavily penalizing a politically out-of-favor industry with new taxes that are user fees in name only.”

Already High Rental Taxes

Large segments of the tourism industry mobilized to oppose the new local car rental tax, including national rental car companies, travel groups, and county tourism agencies.

D.T. Minich, director of the Lee County Convention & Visitors Bureau in Fort Myers, told Bush in a letter made public by the St. Petersburg Times that a $2-a-day local surcharge on top of an existing $2 daily state surcharge would make Florida “one of the highest-taxed rental car markets in the country.”

Taxes and fees already add up to a 23 percent tax on airport car rental customers in Tampa, 29 percent in Jacksonville, and 27 percent in Miami, according to figures provided by tax opponents to the St. Petersburg Times.

“Rental car companies and our visitors already pay their fair share into state and local coffers,” Minich wrote. “Why should our one industry be charged with solving a transportation problem that it does not individually create?”

John W. Skorburg ([email protected]) is a visiting lecturer in economics at the University of Illinois at Chicago and associate editor of Budget & Tax News.

For more information …

Tax Foundation, http://www.taxfoundation.org