Taxes levied specifically on travel services increased the total tax bill for travelers by a whopping 58 percent in 2013, according to an eye-opening report from the Global Business Travel Association that reveals how cash-strapped cities have attempted to reduce debt by tossing the burden onto visitors.
The annual study looked at taxes on hotel lodging, car rentals and restaurant meals in the top 50 U.S. destination cities to show how these funds are regularly used to bankroll local projects that are largely unrelated to tourism and business travel.
“Unfortunately it’s not just state and local governments that see business travelers as their cash cow; the federal government is [also] getting in the game,” GBTA executive director and COO Michael W. McCormick lamented. “This week, Congress may consider a doubling of the TSA aviation security tax. Instead of driving TSA efficiencies that curb spending, Congress’ solution is to double the amount travelers pay.”
McCormick said road warriors not only strengthen the economy but also create American jobs. “Yet governments insist on treating travelers like their ATM,” he noted. “These types of punitive travel taxes will ultimately push business travelers to stay home, and we all pay when governments take a shortsighted approach that raises the costs for business travel.”
GBTA found that Chicago levied the highest total tax (general sales taxes and discriminatory travel taxes) at a combined single-day average of $41. New York City trailed just behind the Windy City at $38.65 per day.
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The rest of the top 10 cities where travelers incur the highest total tax burden may come as somewhat of a surprise. It was Minneapolis, for instance, that came in No. 3 with $36.70 in taxes, followed by Kansas City ($36.61), Indianapolis ($36), Cleveland ($35.41), Boston ($35.32), Seattle ($35.11), Nashville ($34.75) and Houston ($34.16).
When it came strictly to discriminatory travel tax rates, GBTA found that Portland, Ore. -- where all taxes are aimed at travelers -- shot straight to the top of the list with $22.86 in fees per day. Boston ($19.34), Indianapolis ($18.10), Minneapolis ($17.46), Chicago ($17.39), New York ($15.96), Washington ($15.61), Kansas City ($15.26), Charlotte ($15.16) and Milwaukee ($15.04) rounded out the top 10.
“Rising car rental taxes helped boost travel taxes among cities where travelers already face some of the highest total tax burdens in the country,” GBTA Foundation VP of Research Joseph Bates explained. “The recent 3 percent increase in the Motor Vehicle Rental Tax in Minneapolis and the 2 percent increase in the Auto Rental Excise Tax in Indianapolis pushed these cities toward the top of the high-tax group for 2013.”
On the flip side, destinations in the sunshine states of Florida and California had the lowest numbers for both total travel tax burden and discriminatory travel tax burden. At just $1.58 per day, GBTA found that Burbank, Calif., had the absolute lowest discriminatory travel tax rates of any major city in the U.S.
The Virginia-based organization said it conducts its annual study so that companies can make informed choices and spend their money wisely. “Municipalities are under pressure to raise revenue wherever they can, but imposing too heavy a tax burden on business travel is a shortsighted strategy,” Bates said. “With taxes rising in every area of society, companies and travel managers are taking an increasingly hard look at the price they’re being asked to pay to visit any given city or region.”
Highest combined taxes on accommodation, rental cars and meals
1 Portland, Ore.
6 New York City
7 Washington, D.C.
8 Kansas City, Mo.
9 Charlotte, N.C.
Lowest combined taxes on accommodation, rental cars and meals
1 Burbank, Calif.
2 Orange County, Calif.
3 Ontario, Calif.
4 San Diego
5 Oakland, Calif.
6 Tampa, Fla.
tie Fort Lauderdale, Fla.
tie Fort Myers, Fla.
tie West Palm Beach, Fla.
10 Los Angeles