The Brancatelli File By Joe Brancatelli
Read My Lips: Your Travel Taxes Won't Go Down
January 15, 1995 -- Don't expect the tax-cutting lawmakers we voted into office last Election Day to slash the inflated travel levies you pay on airline tickets, hotel rooms and rental cars. In fact, travel taxes may rise in 1995 because those tax-cutting solons will be scrambling for new sources of funds if they really do slash income and property taxes.

"The politicians promised to cut or hold the line on our general taxes, levies like the personal-income or real-estate taxes," explains Rick Webster, tax expert at the Travel and Tourism Government Affairs Council, a coalition of travel groups. "But that leaves open a pretty wide door for a rise in travel taxes and fees to offset the loss in revenue from the general taxes."

Tom Youngblood of the American Hotel and Motel Association, a lodging trade group, agrees. "Travel is vulnerable to new taxation because no politician on Capitol Hill champions the cause of travel."

What form might these new travel-oriented taxes take? Since virtually every segment of travel is already taxed by federal, state, and/or local municipalities, don't look for any new taxes. Instead, experts predict, there could be increases in the existing hotel and car-rental levies and surcharges.

This bleak assessment is especially bad news because American travelers already pay a disproportionately large share of the nation's tax bill. As the accompanying chart shows, every major tourism destination socks travelers with a full spread of tax levies.

The tax on a hotel room in Chicago is 14.86 percent. Car renters in Las Vegas pay 12.5 percent tax. Travelers also pay taxes on meals and gasoline and sometimes a $3 "passenger facility charge" when they arrive at or depart from an airport. Ten percent of the price of every airline ticket sold in this country is a federal tax levy. Then there are the truly abusive fees: an additional tax if a traveler rents a car from an off-airport firm and uses an airport shuttle bus to get to the rental counter and car-rental or hotel-occupancy surcharges on top of existing sales taxes.

How much of an average traveler's dollar is devoured by taxes? Perhaps 14 percent, estimates the Travel and Tourism Council, but the percentage masks the real-dollar tax bite.

Consider a hypothetical seven-night vacation for two. Assume that each roundtrip plane ticket costs $400, a hotel room costs $100 a night and that the couple spends $100 a day on meals, rent a car from an off-airport company for $150 a week, and use 15 gallons of gasoline. If that one-week vacation is in New York, the couple will pay a total of $280.90 in taxes, fees, and surcharges. In San Francisco, the tax bite would be $263.69. A trip to the nation's capital would cost $274.97 in taxes. A Chicago trip would entail a whopping $285.24 in taxes.

The nation's travel-tax tab is astronomical because travelers are such easy targets. After all, they neither live nor vote in the jurisdiction that imposes the taxes. When a politician is faced with the choice between taxing a powerless traveler and taxing a resident who can vote him or her out of office in the next election, the politician will stick it to the traveler every time.

This blatant yet legal form of taxation without representation is called "tax exporting," says Webster of the Tourism Council. "You tax the traveler, the out-of-towner, not your constituent. It explains why virtually every aspect of travel is taxed--and taxed at a higher rate than most other goods and services. That's why a city's hotel tax, which travelers usually pay, is usually far higher than its sales tax, which is generally paid by residents."

That corny old axiom is true: Taxes, like death, are inevitable. But if you plan carefully, you can avoid some travel taxes and reduce the burden of others. Take that levy on using an airport shuttle bus to reach an off-airport car-rental firm. You can avoid it by renting from a firm located on the airport grounds. The car-rental business is so ferociously competitive that most on-airport companies feel compelled to charge no more than the best-known off-airport companies.

Want to reduce your lodging taxes? Look to the nearby suburbs of the cities. The hotel tax in Oakland, for example, is 2 percent lower than in San Francisco. It's 3 percent lower in Anaheim than in Los Angeles and 3.5 percent lower in Fort Lauderdale than Miami.

This column originally appeared in Travel Holiday magazine.

This column is Copyright 1995 - 2017 by Joe Brancatelli. is Copyright 2017 by Joe Brancatelli. All rights reserved. All of the opinions and material in this column are the sole property and responsibility of Joe Brancatelli. This material may not be reproduced in any form without his express written permission.