Local and state taxes comprise a bulkier part of the total cost of renting a car at the 100 most heavily trafficked U.S. airports, according to a study released today by Travelocity. Such add-ons averaged nearly 26 percent of the whole, representing an increase from 24.4 percent in 2003, when Travelocity last took a look at car rental costs at major U.S. airports.
The percentage matches the 26 percent of taxes and fees levied on airline tickets, which travel industry advocates long have noted surpass the "sin taxes" imposed on alcohol and tobacco.
The tax burden at the 10 airport locations with the highest state and local taxes ranged from nearly 39 percent to just over 66 percent of the total cost of the car rental. At airports in Houston, Dallas and Phoenix, the cost of taxes and fees actually surpassed the base rate. Austin, Kansas City, San Antonio, Baltimore, Tulsa, Cleveland and Albuquerque rounded out the 10 most tax-heavy airports.
Neil Abrams, president of Abrams Consulting Group, said the taxes typically fund local projects by targeting visitors. "It depends on what states and municipalities think they can get away with," he said. "There was a trend established about four or five years ago in which municipal projects began to find their way to rental taxes. As I've said many times, it's taxation without representation. You're taxing inbound travelers for projects that they won't be benefiting from: sports stadiums, roadways, convention centers."
The study found that off-airport car rental locations consistently levied lower taxes than their on-airport counterparts, and in some cities there remains a wide gap between on-airport and off-airport costs. In Dallas, 61.4 percent of the total cost of renting a car at the airport came from taxes, while taxes at nearby neighborhood locations only made up 17 percent of the total.
Travelocity conducted its research in December and studied the costs of bookings for a three-day period ending April 10, 2005. For each car rental location, Travelocity looked at a blend of full-size and compact cars. Travelocity used a methodology similar to the one
BTN used to create the 2005 Corporate Travel Index
(BTN, Feb. 21), which examined costs of car rental, hotels and dining in 100 U.S. cities.