ST. LOUIS, MO--(Marketwire - July 21, 2009) - The Coalition Against Discriminatory Car
Rental Excise Taxes -- which includes car rental and car-sharing companies
as well as travel industry, consumer, limousine and truck leasing
organizations -- today announced its opposition to an $2.50 car rental
excise tax currently pending in the Michigan Legislature.
This new tax, proposed to help underwrite the Michigan Promotion Fund, is
just one several that the Coalition has recently opposed. Last month, the
Coalition opposed Wisconsin's recently enacted car rental excise tax.
Journalist and consumer advocate Christopher Elliott expressed similar
doubts about the Wisconsin tax on his Web site: "...a fly-by-night approach
to raising taxes on drivers, many of whom can't vote and may not benefit
from the mass transit projects, is the wrong way. This issue deserves its
own debate, far removed from the chaos of Wisconsin's budget bill."
(
http://www.elliott.org/blog/a-73-percent-tax-on-car-rentals-in-wisconsin-that-cant-be-right/)
In addition, the Coalition -- along with the New Jersey Business and
Industry Association -- has publicly opposed a pending New Jersey car
rental excise tax earmarked for local economic development projects. The
new tax will add another surcharge on top of the existing state car rental
tax and the standard sales tax on car rentals.
"This type of arbitrary tax singles out just one group of consumers to fund
otherwise worthwhile projects or programs that benefit our communities
overall," stated Ray Wagner, Vice President of Government and Legislative
Affairs for Alamo Rent A Car, Enterprise Rent-A Car and National Car
Rental. "That's why our coalition continues to speak out on behalf of car
rental customers who are unfairly targeted by zealous legislators."
The number of U.S. car rental excise taxes has doubled during the past
decade, with more than 100 currently in place in 43 states and the District
of Columbia -- and more than $7.5 billion collected since 1990. Moreover,
the National Consumers League has noted that car rental excise taxes are
regressive because they fall disproportionately on local low-income
residents, many of whom must rent cars because they do not own a vehicle.
This is particularly true for Enterprise Rent-A-Car customers -- nearly one
in four earns less than $40,000 annually; one in 10 earns less than
$30,000; and one in 20 earns less than $20,000.
"Zeroing in on our customers artificially raises the cost of renting a
vehicle in this challenging economy, which in turn impacts auto
manufacturers and inflates insurance rates," explained Wagner. "These
excise taxes are harmful for consumers as well as businesses."
The National Business Travel Association agrees that car rental excise
taxes are fundamentally unfair. "Our research indicates that the majority
of NBTA member companies spend at least half of their car rental budgets in
their home markets," stated NBTA President and Chief Executive Officer
Kevin Maguire.
The Coalition has publicly acknowledged that local government authority not
only is the cornerstone of U.S. democracy, but that local leaders obviously
are struggling to fund many worthwhile programs, including the Michigan
Promotion Fund. However, as municipalities, counties and states carry out
their critical role in protecting consumer and citizen rights, it is
important they extend that protection to all constituents, including car
rental customers.
In fact, public finance economist Kim Rueben wrote the following (see
http://media.marketwire.com/attachments/200907/440457_520771-MW-attached.pdf) last summer to the Philadelphia Daily News: "...more than
half of all cars rented in the U.S. are rented locally, either for personal
or business use; thus most rental excise taxes are paid by local taxpayers.
So, Philadelphia's so-called 'tourist tax' has been paid largely by local
consumers and businesses.
"But there's a larger issue here: Regardless of who pays them, such excise
taxes represent a discriminatory, arbitrary and inequitable policy, whether
the car rental is for an hour, a day or a week... Like other excise taxes,
they also fall disproportionately on those who can least afford to pay them
-- including local residents who rent cars on weekends at discounted rates
because they simply cannot afford to own a car. In short, all car rental
taxes unfairly burden one group of consumers, often to pay for projects and
programs that have no direct connection to renting a car."
About the Coalition Against Discriminatory Car Rental Excise Taxes
The Coalition includes: Advantage Rent A Car, Alamo Rent A Car, American
Car Rental Association, American Society of Travel Agents, Americans for
Tax Reform, Avis Rent A Car, Budget Car Rental, Dollar Rent A Car,
Enterprise Rent-A-Car, The Hertz Corporation, National Car Rental, National
Business Travel Association, National Consumers League, National Limousine
Association, Thrifty Car Rental, Truck Renting and Leasing Association, and
WeCar (car sharing by Enterprise).
Kim S. Rueben
Senior Research Associate/Economist
Philadelphia Daily News
Letter to the Editor
7/29/08
Ms. Sandy Shea
Editorial Page Editor
Philadelphia Daily News
Box 7788,
Philadelphia, PA 19101
Dear Ms. Shea:
Your July 23 editorial, "Taxing Times for Car-Sharers," argued that
Philadelphia's hourly car rental customers should be exempt from car-rental
taxes because those taxes were never meant to be paid by local residents.
However, local residents also patronize more traditional rental agencies in
addition to car share companies, so the Daily News has effectively -- if
unintentionally -- made the case for why we might want to abolish these
taxes entirely on any kind of car rental.
In fact, car-rental taxes aren't paid "mainly by out-of-towners," as your
editorial suggested.
Economist William Gale and I have documented that more than half of all
cars rented in the U.S. are rented locally, either for personal or business
use -- thus, most rental excise taxes are paid by local taxpayers. So,
Philadelphia's so-called "tourist tax" has been paid largely by local
consumers and businesses.
But there's a larger issue here: Regardless of who pays them, such excise
taxes represent a discriminatory, arbitrary and inequitable policy, whether
the car rental is for an hour, a day or a week.
Indeed, as you editorialized on July 23, many specific excise taxes are
passed explicitly to influence behavior and why discourage car rentals?
Like other excise taxes, they also often fall disproportionately on those
who can least afford to pay them -- including local residents who rent cars
on weekends at discounted rates because they simply cannot afford to own a
car.
In short, all car-rental taxes unfairly burden one group of consumers,
often to pay for projects and programs that have no direct connection to
renting a car.
That's why, in general, car-rental excise taxes are bad tax policy and bad
for car-sharing corporations as well as consumers overall.
Sincerely,
Kim Rueben
Washington, D.C.
Contact Information: For more information, contact:
Laura Bryant
314-512-4178
