Taxes levied specifically on travel-related services increased the total tax bill for a traveler by 58 percent in 2013, according to a new report by the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA).
The annual study examines hotel lodging, car rentals and restaurant meal taxes in the top 50 U.S. destination cities, which are regularly used to fund local projects unrelated to tourism and business travel, GBTA says.
“Unfortunately, it’s not just state and local governments that see business travelers as their cash cow – the federal government is getting in the game. 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. Road warriors strengthen the economy, create jobs and drive economic security. Yet governments insist on treating travelers like their ATM. These types of punitive travel taxes will ultimately push business travelers to stay home, and we all pay when governments take a short-sighted approach that raises the costs for business travel," said GBTA executive director and COO Michael W. McCormick.
Previously, the GBTA had applauded the announcement by the TSA to offer a new application process which allows U.S. citizens to directly enroll in TSA PreCheck but expressed opposition to an increase in the aviation security tax paid by passengers.
The study presents several views of travel taxes to help travelers make informed choices. 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.
The top 10 U.S. cities where travelers incur the highest total tax burden in central city locations, factoring in general sales taxes and discriminatory travel taxes, are:
Chicago, IL, $41.04
New York, NY, $38.65
Minneapolis, MN, $36.70
Kansas City, MO, $36.61
Indianapolis, IN, $36.00
Cleveland, OH, $35.41
Boston, MA, $35.32
Seattle, WA, $35.11
Nashville, TN, $34.75
Houston, TX, $34.16
Discriminatory travel taxes are those imposed specifically on travel services above and beyond general sales taxes. California and Florida are among the states with the lowest discriminatory travel tax rates in the country, GBTA says.
“Municipalities are under pressure to raise revenue wherever they can, but imposing too heavy a tax burden on business travel is a shortsighted strategy,” said Joseph Bates, GBTA Foundation vice president of research. “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.”
“Rising car rental taxes helped boost travel taxes among cities where travelers already face some of the highest total tax burdens in the country. 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,” continued Bates.
The complete list of the top 50 U.S. destinations offers detailed insight for travel managers interested in understanding the impact that these taxes have on their business travel spend, GBTA notes.