Towns Tax Rental Cars For Extra Revenue
REVERE, Mass., Dec. 17, 2005 — -- Money is tight in this old town just north of Boston's Logan Airport. The police station dates to 1909, and is crumbling. A new public safety building, with space for a firefighting unit, would cost $10 million.
But how to pay for it? The city's political leaders looked up at those planes roaring by, and had an idea.
"We are heavily impacted by that airport," says Mayor Tom Ambrosino. "We feel we are entitled for some mitigations for those quality-of-life impacts in our community."
Ambrosino says there was no way to tax the airport itself. But they could tax the rental cars that people pick up in Revere. If you rent a car here, you pay a $10 "transaction fee" to help build the new police station.
Rental-car taxes are perhaps the newest way local governments have found to pay for new projects.
Boston already tacks on a fee to rental car bills. Revere says it was just doing the same.
"If it's not that," Ambrosino says, "it's put on the backs of local property taxpayers who really are at their limit."
Enterprise Rent-a-Car, the nation's largest rental-car brand, counts 44 new taxes or proposals across the country. For example:
- Pick up a car in Arlington, Tex., and you're helping build a new stadium for the Dallas Cowboys.
- In Utah County, Utah, south of Salt Lake City, you're helping pay for a wildlife museum.
- Rent a car in Wisconsin and you're paying for mass transit improvements.
The fees add up. In Revere, you may pay $30 for the car itself, and another $10 to the town.
"When our customers are identified as the source of funding," said Lee Kaplan, a senior vice president at Enterprise, "well, we think it's unfair."
There's not much the rental companies can do, though -- and they did themselves no favors by dissolving their Washington lobby group.
"This is a remarkably fractious industry," said an executive who asked not to be named.
The only remedy for consumers is to do a lot of homework. Car-rental companies often will spell out local fees on their Web sites or by phone -- but towns have learned from experience that very few people will actually go to another town to get around the fees.
Customers such as Dan Meany say they feel stuck. Meany lives two towns away from Revere, and needs cars for business.
"It's taxation without representation," he said. "I didn't ask for it, I didn't vote for it, and I'm the one paying for it every week."
Ambrosino says the tax law in Revere includes a promise that the rental car tax will be canceled the minute the new public safety building is paid for.
If all goes to plan, that would be 30 years from now.
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