Rental firms voice qualms on car tax
Rental firms voice qualms on car tax
Raise would put N.O. atop national average
Thursday, June 02, 2005
By Robert Travis Scott
BATON ROUGE -- The New Orleans auto rental tax increase proposed by Gov. Kathleen Blanco to help pay for a deal with the Saints would move rental tax rates at Louis Armstrong International Airport above the national average, according to a recent travel industry study.
As part of a $15 million annual support package for the National Football League team, including higher hotel room taxes and ticket and concession fees at the Superdome, the governor is pushing for a new 5 percent rental car tax in Orleans and Jefferson parishes. The money would be used to help pay for the current or a future deal with the Saints.
Blanco's chief of staff, Andy Kopplin, has said the governor wants to pay for a Saints deal with money from multiple sources in the New Orleans area.
Annual car rental revenue in the two parishes is $95.3 million, meaning that Blanco's tax would bring in about $4.9 million per year, according to legislative analysts.
Auto rentals in Orleans and Jefferson are charged state and local sales taxes of 9 percent, a state excise tax of 2.5 percent and a local excise tax of 0.5 percent. Airport car rental taxes and fees are higher, including 10.75 percent in sales taxes, 3 percent in excise taxes and 11.1 percent for a fee that goes to airport operations.
That current airport rental tax rate of 24.85 percent is just below the national average of 25.8 percent, according to a survey released in March by the online service Travelocity comparing rental tax rates across the country. The survey ranks Armstrong No. 58 on a list of airports with the most expensive rental taxes. Adding the new tax would put the rate at 29.85 percent, moving Armstrong to No. 36.
Hertz Corp. spokesman Rich Broome called the Blanco tax proposal "unfortunate" and said it would blemish New Orleans' otherwise positive image for tourism promotion. At some point, higher tourism taxes will hurt business, he said.
"This is an ongoing trend" across the nation as a means to finance stadiums or other municipal projects, which is unfortunate, said Neil Abrams, president of Abrams Consulting Group, a widely recognized auto rental industry consultant. "Rental customers are easy fodder to go after."
With car rental taxes, politicians are under the impression that they are taxing visitors and therefore do not have to deal with the negative repercussions of taxing local people, Abrams said. Though this is largely true at airports, many people rent cars at non-airport locations, particularly with Enterprise Rent-a-Car, he said.
Enterprise, the nation's largest car rental company, does not oppose local tax initiatives to raise money for sports franchises or stadiums, but the company thinks that such taxes should be broadly based, said Patrick Farrell, an Enterprise vice president.
A sports franchise has value to the whole community, so rental car customers, few of whom are renting cars for reasons related to football games, should not have to bear a disproportionate burden of supporting a team, Farrell said. Fundamentally, taxes on airport rental cars are taxation without representation, he said.
"This is about bad tax policy," Farrell said.
Enterprise specializes in non-airport rentals at various locations in the New Orleans area. Most of the company's business in the area is from locals, not tourists, he said.
The Business Travel Coalition, a national advocacy group for lower business travel costs, issued a statement Tuesday opposing Blanco's "sweeping travel and tourism tax measure."
The bill makes some exceptions to the rental tax, including loaner cars from repair shops and insurers.
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Robert Travis Scott can be reached at email@example.com or (225) 342-4197.
RE: Rental firms voice qualms on car tax
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