A sweeping tax hike proposed by the San Mateo County (CA) Board of Supervisors punishes travelers and should be dropped, the U.S. Travel Association urged today. The Board announced plans yesterday for a 2.5 percent rental car tax increase, a 2 percent hotel occupancy tax hike, and a new 8 percent parking tax as part of an effort to address the county’s general fund budget deficit.
The taxes would be charged to all travelers renting vehicles from San Francisco International Airport (SFO), staying in SFO-area hotels, or parking at SFO and local hotels.
“We urge the Board of Supervisors to drop their proposed tax hike. The new taxes single out travelers for punitive tax treatment, forcing them, for example, to pay a combined 25 percent tax on all car rentals,” said Geoff Freeman, chief operating officer of the U.S. Travel Association.
Travelers renting vehicles at SFO already shoulder a significant tax burden. In addition to the 8.25 percent state sales tax, SFO rental car customers currently must pay 11.11 percent in airport concession taxes and a 2.85 percent California tourism tax – a total tax rate of 22.21 percent. The proposed increase would raise the total rental car tax to 24.71 percent.
The proposal represents an 11.3 percent hike in the current car rental tax and a 20 percent boost in the hotel occupancy tax, currently set at 10 percent. The parking levy is a new tax.
The San Mateo County Board of Supervisors proposed a similar 2.5 percent rental car tax hike and 8 percent parking tax in 2008, but county voters soundly defeated the measure.
“We understand that government leaders are facing tough budget choices in a challenging economy, but heaping more taxes on business and leisure travelers will only reduce overall travel demand,” said Freeman. “Fewer travelers hurt not only car rental and hotel companies, but hundreds of small companies who rely on visitors as an important source of business, endangering a powerful source of local employment and tax revenues.”
Results from a national survey commissioned by U.S. Travel in April 2011, suggest that travelers would react negatively to the proposed tax hike. In the 2011 survey, 49 percent of travelers said they alter plans due to high travel taxes. Nearly two-thirds of travelers surveyed (64 percent) said the total tax rate on rental cars is “much more” than they expected to pay compared to other travel taxes. And nearly seven out of ten (68 percent) travelers described hotel taxes as “high” or “very high.” Only 14 percent of surveyed travelers said “non-travel related expenditures” such as “contributions to government general funds” would be an “appropriate” use of travel taxes.
The U.S. Travel Association is the national, non-profit organization representing all components of the travel industry that generates $1.8 trillion in economic output and supports 14 million jobs. U.S. Travel's mission is to increase travel to and within the United States.
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