Rental car tax has opponents, too

By Justin Vellucci
TRIBUNE-REVIEW
Thursday, January 17, 2008

 

The new $2-a-day surcharge on rental cars is the Rodney Dangerfield of taxes. It gets no respect.

 

No one has plastered mug shots of Allegheny County Chief Executive Dan Onorato to the windows of car rental agencies.

 

No analysts predict the migration of Enterprise Rent-A-Car, Hertz or Avis across county lines.

 

But opponents of the tax, who may be just as frustrated as the restaurateurs and bar owners who protested the 10-percent drink tax, say the county is not acting fairly in how it distributes the burden of paying for local transit. Money from both taxes will become the county's matching share to fund Port Authority of Allegheny County.

 

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"If you arbitrarily single out one group of customers ... that makes it discriminatory," said Laura Bryant, a spokeswoman for the national Coalition Against Discriminatory Car Rental Excise Taxes.

 

"Why did they go after car rental customers?" asked Bryant, who also works for the company that operates Enterprise Rent-A-Car, National Car Rental and Alamo Rent A Car. "Because they haven't been in a good position to fight back."

 

Onorato has said the two taxes, which took effect Jan. 1, are the only alternatives to raising property taxes. He does not expect them to hurt tourism or convention traffic.

 

"The options are limited," said Onorato, who discussed the issue with Enterprise Rent-A-Car and Flexcar, a national car-sharing program that operates in Pittsburgh.

 

Several local car rental agencies at Pittsburgh International Airport either declined to comment or forwarded questions to their corporate headquarters.

 

A spokesman for Zipcar, a car-sharing program that recently merged with Flexcar, criticized the local tax.

 

"Zipcar believes that policies should encourage car-sharing rather than penalizing members with additional taxes," said John Williams, a Seattle-based spokesman for the company.

 

Some critics say the tax isn't shouldered just by out-of-towners. The rental car industry derives more than half of its revenues from local residents who need transportation while a car is being repaired, and from families renting minivans for vacations or recreation and business people using vehicles for corporate travel, Bryant said.

 

The taxes levied on rental cars have grown in recent years. More than 95 car rental taxes have been enacted since 1976, according to the Virginia-based group National Business Travel Association.

 

"Some taxes are matched to their purposes. Gasoline taxes, for example, are often dedicated to maintaining and constructing roads and bridges," wrote Brookings Institution Deputy Director William G. Gale and Kim Rueben, an Urban Institute senior research associate, in a 2006 report for Enterprise Rent-A-Car. "But one of the most remarkable aspects of car rental taxes is the wide variety of projects they finance around the country that are not in any way related to the act of renting a car."

 

The number of rentals, rental days and total revenues all dropped after Kansas City voters approved a $4-a-day rental car tax in 2004, the report said.

 

"The rental car agencies were very much against it," said Jordan Griffin, senior management analyst for Kansas City's budget office. "They were very vocal about their opposition to it."

 

The city raised $8.9 million through the tax in fiscal 2005-06 and $9.9 million the next year, Griffin said.

 

The rental car tax was expected to generate $11.2 million to $11.7 million combined with a $1.50-a-night hotel/motel tax, Griffin said. Instead, they have netted Kansas City between $13.5 million and $15 million a year for a new arena and tourism efforts.

 

Allegheny County's hotel tax -- a 7 percent levy on the cost of room occupancy -- generated about $20 million in each of the past two years, said Bob Miecznikowski, manager of the county's special tax division.

 

Miecznikowski said he has received few calls about the rental car tax, which is expected to generate $4 million this year.

 

 

 

Justin Vellucci can be reached at jvellucci@tribweb.com or 412-320-7847.
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Car rental triples when death in family cuts vacation short

Q: We recently booked a rental car for 10 days through Alamo.com. Unfortunately, my husband's grandmother passed away while we were on vacation, and we had to come home three days early.

A few days after I returned, I discovered my credit card had been charged more than triple the price that Alamo had originally quoted us. The early-return policy on Alamo's Web site says something about a $15-per-day fee for early returns, but our weekly rate was raised from $152 to $513.

Neither my husband nor I were made aware of the higher charges when we returned the car. We did not authorize or sign a receipt agreeing to pay that amount.

Alamo claims that we broke our original contract when we returned the car early, but I feel this is a classic case of bait and switch. Do I have any recourse in this matter? -- Molly Reinhardt, Kawkawlin, Mich.

A: Raising your weekly rate by $361 because you returned your car three days early makes no sense. If anything, Alamo should be offering you a refund for bringing one of its vehicles back early, allowing them to rent the car to someone else.

But that's not the way it works. Two years ago, Alamo made a small but significant change to its return policy. Not only would it apply a $15-per-day early return fee, but it would also recalculate your rate, charging you the same price that walk-up customers pay for renting cars without prior reservations.

In other words, you would owe Alamo the penalty plus the rate difference, which in your case is an extra $361.

The Alamo policy is similar to the airlines rules. Booking a seat two weeks in advance is almost always cheaper than a walk-up fare. And if you change your plans, you're subject to a rebooking fee.

You could have prevented this excessive surcharge by carefully reading the terms of your rental contract and asking about the early-return fee when you came home before you were supposed to. Assuming everything is all right because no one said anything was a mistake.

If you had asked, you might have been able to explain your situation to a manager, who would have almost certainly adjusted your rate in a more compassionate way.

I contacted Alamo on your behalf. Regina Barr, a senior customer service manager, contacted me and said that under the circumstances, the company would honor the original weekly rate. It has issued a refund.
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