Florida Wants to Double Local Car Rental Tax

Published July 1, 2006

The Florida legislature voted in May to allow local governments to increase the current car rental tax surcharge from $2 to $4 per rental. Now only Gov. Jeb Bush (R) and November referenda in localities that want to increase the tax stand in the way of car rental tax hikes.

The Florida Senate passed the proposal on May 5, by a 34-4 vote. The House had approved the bill earlier in the session by a similarly wide margin. Local governments are looking for the new money to fund roadwork and help alleviate traffic congestion.

Bush has indicated misgivings about allowing higher car rental surcharges, telling news-press.com the biggest problem with the measure is that people who would pay the higher tax “can’t vote on it.”

Concerned about Tourism

Even though the vote was fairly lopsided, several legislators argued strongly against the measure.

“Tourism is what pays the freight up here, it is the reason we don’t have a statewide income tax,” said state Rep. Randy Johnson (R-Celebration), one of the most vocal opponents of the proposed increase, to the Associated Press on May 3.

D.T. Minich, director of the Lee County Visitor & Convention Bureau, said the tax could affect the county’s ability to draw international tourists. “They’re already concerned with how high costs are already,” Minich said.

Grover Norquist, president of Americans for Tax Reform (ATR), met with Bush during the spring legislative session.

“Our nonprofit group has fought the surcharge hard this year, running a television commercial, reminding lawmakers of their no-new-taxes pledges, and lobbying alongside the rental-car companies,” Norquist said.

Local Businesses Affected

Bill Connors, chief operating officer of the National Business Travel Association (NBTA), remarked along with Norquist at a May press conference, “Increases in car rental excise taxes in municipalities are quickly becoming a major issue in the business travel market, mainly because legislators believe it is the ideal way to fund projects without taxing voting constituents. In actuality, they are imposing additional taxes on local businesses that already pay their fair share.”

Connors continued, “Legislators must be mindful of the impact car rental excise taxes will have on businesses in their municipalities. It may not seem like much, but when you calculate the number of local car rentals businesses use for in-state employees or bringing employees and clients from other locations to a destination, we are talking about a tremendous financial burden.”

Most of the rental car companies are members of NBTA, which issued a news release in April highlighting its members’ concerns.

Car Rental Taxes Surging

“Local government represents the cornerstone of the United States, and we fully support the critical role that localities play in protecting consumer and citizen rights,” said Andy Taylor, chairman and CEO of Enterprise Rent-A-Car, in the release. “However, with 78 car rental excise taxes in 37 states and 45 more such taxes pending or under discussion, we must speak out on behalf of our customers. These arbitrary taxes unfairly single out our customers and potentially interfere with interstate commerce by hindering free trade in the nationwide car rental industry.”

“Taxing travelers has become big sport in cities throughout the United States,” said Gary Paxton, president and CEO of Dollar Thrifty Automotive Group, Inc. “Politicians like it because constituents believe such taxes affect out-of-towners, but the reality is that a huge portion of cars are rented by local citizens and businesses, who end up paying more than their fair share of the cost of the projects funded by these taxes. The public should understand the true nature of these taxes and should be outraged.”

Bill Lobeck, CEO of Vanguard Car Rental USA Inc., the operator of both the National Car Rental and Alamo Rent A Car brands, said state and local government officials must be reminded that corporate travel is a cornerstone of the global economy and leisure travel is critical to the financial vibrancy of their states and cities.

“Our customers have been unfairly singled out to help subsidize sports stadiums and other municipal projects,” Lobeck said. “We will continue to be good corporate citizens, but we feel that these unfair levies, arbitrarily put on our customers, are wrong and must not continue.”

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

For more information …

For more information on car rental excise taxes, see http://www.nbta.org/About/News/Releases2006/rls040306.htm.