Air Travel News
Study finds big local variations in taxes on business travelers
In many jurisdictions, local politicians who oppose tax increases in general don't hesitate to approve higher levies on travelers who visit their cities. Why? because those travelers don't vote in local elections. And now a new study shows which cities put the highest tax burdens on visiting business travelers.
The study was compiled by the GBTA Foundation, an affiliate of the Global Business Travel Association. In general, it found that what it calls “discriminatory travel taxes” impose an average increased cost of 57 percent over the general sales taxes paid by locals. The study analyzed the extra levies imposed on car rentals, hotel rooms and restaurant meals in the top 50 U.S. destination cities.
As an added indignity to business travelers, GBTA found that these taxes “are often used to fund local projects unrelated to tourism and business travel” — things like sports stadiums, for example.
“Cities and states must think carefully about the sales that local businesses will lose because of the higher costs that travel taxes impose,” said Joseph Bates, vp-research at the GBTA Foundation. “Tax rates that spike add another dimension for travel managers and local businesses. If spending one night in Chicago is 81 percent more expensive than visiting Ft. Lauderdale, for example, it can have an effect on where businesses decide to meet, hold events, and spend their travel dollars.”
In looking at which cities had the highest “discriminatory travel tax rates” — i.e., rates over and above the general sales tax — the GBTA study put Portland, Ore. at the top of the list, with travel taxes that cost an extra $22.45 per day. Ranking second was Boston at $19.19, followed by Chicago ($16.49), New York ($15.74), Minneapolis ($15.45), Kansas City ($15.21), Charlotte ($14.88), Cleveland ($14.79) and Milwaukee ($14.76).
The cities with the lowest incremental travel taxes were all in California and Florida. The lowest travel tax rate was in Burbank, Calif., adding an extra $1.81 per day to travelers' costs, followed by Orange County, Calif. ($3.36); Ontario, Calif. ($4.66); San Diego ($5.43); Los Angeles ($5.95); Oakland ($5.95); and the Florida cities of Ft. Lauderdale, Ft. Myers, Tampa and West Palm Beach, all at $7.17.
The total tax burden on travelers — combining the above travel-related levies with local sales taxes — is highest in Chicago, the study found, at $40.31 per day. The rate is $38.98 in New York City, and is above $34 a day in Boston, Kansas City, Seattle, Minneapolis, Cleveland, Indianapolis and Nashville. The lowest total daily tax rate is $22.21 in Ft. Lauderdale, Ft. Myers and West Palm Beach, Fla. It is also below $23 in Detroit, Portland, and Orange County, Calif.