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Local consumers take rental tax hit

We all agree that we need to fix our roads and infrastructure, but before the Georgia legislature tacks a $5 flat fee across the board on rental vehicles, there are a few things they should know. Shifting the burden from a gas tax to a user fee in the form of a rental car surcharge does nothing to ease the financial stress on Georgia’s consumers. In fact, all it does is ensure that the burden is applied less fairly and targeted at consumers who can least afford it.

Since 1990, more than 100 rental car taxes have been enacted in 43 states and Washington, DC. In total, rental car customers have spent more than $7.5 billion to fund projects, repair roads and plug budget gaps. There’s a prevailing but erroneous belief that rental cars are driven by business travelers and tourists whose out-of-town money is seen as quick revenue fix for state transportation budgets.

This is simply untrue. In fact, approximately 50 percent of all car rentals comes from local car rental and car-sharing drivers. These are consumers who need a reliable vehicle to travel to a job interview, or take a trip to buy groceries, or replace their car when it’s in the shop. These are often consumers who can least afford to bear the burden of these discriminatory taxes – part-time workers, single parents and retirees on fixed incomes. Given the explosion of rental car taxes, politicians clearly see these consumers as their piggy banks and endless revenue generators.

Imagine you are renting a car from a local dealer to run a typical weekend errand. If the legislature has its way, the $5 fee they are considering will be added on top of the existing 3 percent county tax. While the underlying cost of renting the vehicle is relatively low, it is now possible that 50 percent of the total payment will go toward taxes and user fees. How much is too much? The National Consumers League (NCL) understands the role of taxation in providing critical services, but we do not support using a discriminatory tax targeted at the consumers who drive less frequently and can least afford the burden. Indeed, the NCL is part of the Curb Auto Rental Taxes (CART) campaign, a broad coalition of companies, policy organizations, and labor and consumer advocacy groups working to end excessive taxation on consumers in Georgia and across the country.

As the legislature considers how to fund Georgia’s transportation needs, I hope they will consider a way to ease the burden on consumers, not shift it from one consumer to another.

Sally Greenberg is executive director of the National Consumers League.

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