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Taxes Targeting Travel Services Increase Cost by 56 Percent, Says New StudyJuly 21, 2011 By: George Dooley Travel Agent
Discriminatory travel taxes and fees enacted on travel-related services impose an average increased cost on visitors of 56 percent more than general sales tax, the Global Business Travel Association (GBTA) reports. The GBTA's research arm released the 2011 findings from its annual study of car rental, hotel and meal taxes in the top 50 U.S. travel destination cities. These taxes are often used to fund local projects unrelated to tourism and business travel, GBTA said.
“The difference in the effective tax rate on travelers from one city to the next is quite remarkable. For instance, a traveler who visits Chicago pays 80 percent more in taxes during their one-night stay than a traveler visiting Ft. Lauderdale,” said Joe Bates, GBTA Foundation director of research. “If you are a travel manager planning a meeting, this is important information to take into consideration. And if you are a retail business attempting to lure travelers, this tax rate differential is a competitive advantage or disadvantage.”
The study provides several different views of travel taxes to help readers make informed choices, GBTA notes. The top 50 markets are ranked by overall travel tax burden, including general sales tax and discriminatory travel taxes, and by discriminatory travel tax burden, excluding general sales taxes to count only taxes that target car rentals, hotel stays and meals. Separate data are offered for central city and airport locations, as the tax regimes are often distinct.
“Each year the GBTA Foundation undertakes this important study to help travel managers make the best decisions for their companies. The rising cost of business travel and especially meetings and events is an area of deep concern when developing travel plans,” Bates continued.
The research shows the U.S. cities where travelers incur the lowest total tax burden in central city locations, factoring in general sales taxes and discriminatory travel taxes, are:
1. Fort Lauderdale, FL
2. Fort Myers, FL
3. West Palm Beach, FL
4. Detroit, MI
5. Portland, OR
The cities that impose the highest total taxes on travelers are:
1. Chicago, IL
2. New York, NY
3. Seattle, WA
4. Boston, MA
5. Kansas City, MO
Discriminatory travel taxes are those imposed specifically on travel services above and beyond general sales taxes. The U.S. cities with the lowest discriminatory travel tax rates in central city locations are:
1. Orange County, CA
2. San Diego, CA
3. San Jose, CA
4. Burbank, CA
5. Ontario, CA
The cities that impose the highest discriminatory travel taxes on travelers are:
1. Portland, OR
2. Boston, MA
3. Minneapolis, MN
4. New York, NY
5. Chicago, IL
The full report is available to GBTA members and offers detailed insight for travel managers interested in understanding the impact that these taxes have on their business travel spend. Non-members can purchase this study through the GBTA Foundation website: www.gbta.org.