NCPA - National Center for Policy Analysis


April 11, 2007

For all the complaints travelers have been voicing about delayed flights, declining service, crowded planes and invasive security procedures, there has been comparatively little outcry about another trend: escalating taxes on flights, car rentals and hotel stays, says the New York Times.

But travel companies and trade associations are beginning to reach for the megaphone on their customers' behalf, protesting the growing cost of taxes, many of them financing initiatives that have nothing to do with travel.

In partnership with major car rental companies, the association has focused on fighting high taxes on car rentals and has tried to raise awareness by lobbying state and local officials:

  • Taxes and other charges passed along by car rental companies, like vehicle licensing fees, raise the average rental bill 28 percent at airport locations, according to Travelocity, the online travel agency.
  • These taxes and fees can exceed 50 percent at airports in Kansas City, Dallas, Atlanta and Seattle.
  • As of last October, there were "something like 86" special taxes and surcharges around the country levied on car rentals, and another 48 were being considered, said Neil Abrams, president of the Abrams Consulting Group, which follows the car rental industry.


  • One of the most thorough studies of hotel taxes, conducted by the American Economics Group, a consulting firm, found that these taxes added 12 percent to an average hotel bill in 2003, compared with 9 percent in 1997.
  • These "bed taxes" include local sales taxes as well as any taxes charged specifically on hotel rooms.

Industry analysts say more municipalities are taxing rental customers to pay for local projects like sports stadiums, convention centers, public transportation improvements and even a rodeo arena.

Source: Susan Stellin, "Tax Bites on Travelers Go Deeper," New York Times, April 10, 2007.

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