Tuesday, November 03, 2009

Increased Rental Car Taxes

If you travel and rent vehicles often then you may have noticed that you are paying more for your car then you did last year. This is because many struggling local governments have increased the taxes levied on rental cars in attempt to fix budget problems. According to Gary Stoller of the Washington Post, legislators have been able to pass these increases since they can be sold as 'out-of-towners' taxes.

Anyone renting a car in Maine would be paying the state 12.5% of their bill in excise taxes starting last month if the legislature there had its way.

But residents blocked the state's new tax-reform law — which included a tax increase from 10% to 12.5% on rental car bills — by signing petitions in opposition. If the signatures on the petitions turn out to be valid, the increase will be put to a vote in June, says Sara Lewis, a Maine taxation official.

The action in Maine represents something of a victory for business travelers, corporate travel departments and rental-car companies who are increasingly upset over what's been an explosion in taxes imposed on renting a car.

Airline fees "are bad, but the worst are car-rental taxes," says frequent business traveler Tony Harrison, who has rented cars 75 days so far this year and paid upwards of 20% of his bill in taxes in some cities.

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