Tourist Taxes Add to Travel Budget

"Taxation without representation." If you thought that issue got settled in 1763, think again. States, cities, districts, and airports around the country have zeroed in on nonresident tourists—who can't vote on local tax matters—as a money machine for various local projects and activities. According to a recent study sponsored by the National Business Travel Association (NBTA), the 50 largest U.S. cities add an average (as well as a median) of $30 a day in taxes to visitors. To be fair, more than half of that total tax take is general—paid by locals who use visitor-type services as well as out-of-town guests—but quite a bit of it squarely targets visitors. And as a visitor, unfortunately, you have only a few ways to lower the tax bite.

The research was based on assumptions about typical business travel to the 50 most important domestic destination cities, and includes 2008 rates for total taxes plus discriminatory taxes on hotel accommodations, restaurant meals, and rental cars. Presumably, leisure travelers might pay less than typical business travelers. Nevertheless, leisure travelers probably pay more taxes than they realize—and more than they budget when chasing down the lowest airfares, hotel rates, and rental rates.

• The average and median total tax takes among the 50 cities were both roughly $30 a day. Those figures apply to travelers who enter/leave through the main local airport(s). The highest total takes ranged down from a top of $41 a day in Chicago through Seattle, Dallas, San Antonio, Houston, Minneapolis, Phoenix, Kansas City, and Austin, to $35 in New York. The lowest total take ranged up from $21 a day in Portland, Oregon, through Detroit, Honolulu, Ft. Myers, Ft. Lauderdale, Orange County, California, West Palm Beach, Hartford, and Burbank, to Orlando at $25.
• The average and median total discriminatory tax takes—generated mainly from visitors—were both roughly $11 a day. The highest total discriminatory tax take ranged down from $21 a day in Portland through Minneapolis, Boston, San Antonio, Dallas, Indianapolis, Kansas City, Houston, and Washington to $15 at Charlotte. The lowest total discriminatory tax take ranged up from about $1 in Burbank through Oakland, Orange County, San Jose, Ontario, Sacramento, San Diego, Los Angeles, and San Francisco, to $7 a day in Detroit.
• General sales taxes make up the bulk of total hotel taxes in most California cities, plus such other important visitor destinations as Las Vegas, Salt Lake City, and several Florida cities. On the other hand, discriminatory taxes greatly exceed local sales taxes in Portland (no local sales tax at all) and in more than half of the other 50 cities.
• Airport car-rental taxes consisted mainly of sales tax in California, St. Louis, and Columbus, Ohio, but they ranged from about $7 a day in several Texas cities up through Seattle, Minneapolis, Salt Lake City, Milwaukee, Portland, Oregon, Chicago, and Phoenix, to $15 a day in Boston.

I seriously doubt that many of you will select a destination for either a vacation or business trip on the basis of which cities have the lowest taxes. So you have only a few ways to avoid some of the more onerous assessments:

• Probably the number one strategy for lowering total taxes is to avoid renting cars at those very high-rate cities. The figures cited above cover just a one-day rental, but apply those daily rates to a full week rental and you could wind up paying close to $100 in discriminatory taxes. If you do rent a car, an off-airport location can often cut your costs substantially.
• You can occasionally cut lodging taxes by staying across a nearby state line from your real destination, as New Jersey is fond of promoting to New York visitors. That strategy, however, often entails too much commuting to be feasible.

Beyond those, you just have to bear it—and budget for it on your next trip.