Why are Car Rental Taxes So High
I thought I found a great deal on a rental car for $20 a day, but when I looked at the total on the rate quote, I was being charged an extra $18 a day in taxes and surcharges! What are all these fees for and is there any way to avoid them?
A 2005 study from Travelocity states that major American airports tacked on an average of 25.8 percent to your total bill (up from 24.4 percent in 2003) in airport fees as well as local and state taxes. There are so many added fees beyond just the rate itself. The fees basically fall into three categories... Concessionary, government imposed and service related.
Concession Fees are things like an airport or location concession fee.
An airport fee or airport concession fee is a recovery fee. The airport charges the car rental company a certain percentage of each rental, for the right to operate on or near the airport. This fee is collected by the car rental company and paid to the airport.
If you are picking up a rental car at a hotel-based location, you may see a hotel concession recovery fee, include in your car rental taxes and surcharges. It is the same concept as an airport fee.
These fees can be avoided by renting at an off-airport or neighborhood location, but make sure to compare rate totals... sometimes the base rates are higher at the off airport locations and the cost of having to get transportation to the location (if you are arriving at an airport) will offset any saving you might get!
Government Imposed Fees
Many local governments charge fees to fund local development projects, such as convention centers or sports stadiums.
The added taxes (such as a convention center surcharge) are imposed by local and state governments, as a means of drawing income from travelers in order to fund local projects. Travelocity's 2005 research findings also showed such taxes to be dramatically lower at neighborhood car rental locations than airport locations, averaging only 14.1 percent of the final cost.
Many renters feel that it is the car rental companies that make up all these extra convention surcharges or stadium taxes and fees, but they are, in fact, government imposed. (Either by the state or city)
Besides airport fees, state taxes and licensing fees, Rental car fees have long been a means for local governments to generate funds for stadiums, convention centers and concert halls in various cities.
In enacting these fees city officials believe that local constituents are shielded from payment because out-of-town visitors — and therefore non-voters — carry most of the burden. The car rental industry argues against such fees and taxes that have nothing to do with rental car operations. "It's inequitable and unfair because they're unrelated," says Laura Bryant, a spokeswoman for Enterprise in an article in USA Today in October of 2006.
Sales tax and airport charges vary considerably from state to state and from country to country. Unfortunately, you probably can't avoid state and local sales taxes -- or the European equivalent, the value-added tax (VAT), which can be as high as 25 percent. (Note that in some countries you may be entitled to a partial refund of the VAT.)
Service Related Fees
Most car rental companies now have a number of fees like an "energy surchage", fuel fees, cancellation fees, etc. These fees have been added to try and offset the costs of operating the rental location, refuelling and cancellations of reservations. (The car rental companies report an average no show rate of around 30%.) While you can't avoid the energy fee, you can make sure to fill your tank before you return and make sure you show your reciept, to get the fuel fee waived, and if at all possible, make sure to give the required cancellation notice, in order to avoid no show or cancellation fees.
It's definitely a frustrating thing when the cost of all the taxes and surchages add up to sometimes more, per day, than the actual cost of the rental car itself!!
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Category Article Car Rental Fees
