Are you planning on renting a car? Do you have a particular budget in mind? Well, you might be in for a surprise and find that the final cost is much more than what you expected. You would realise that the final bill costs quite a lot due to hidden costs and many travellers do not comprehend this until they actually have the bill in their hands. More than 40 states in the US have been levying charges on all short-term rental vehicles. The rates of rental vehicles taxes are between 2% -11 % and can differ from each state and each rental company.
Why implement taxes and fees?
Throughout the years, many locals and state governments have increased the fees and taxes for rentals in order to increase revenues. In general, these taxes only affect those individuals living out of town.
Short term rental vehicles are those automobiles that have been rented for less than 30 days and are subjected to local and state sales taxes. Certain states such as Washington, Virginia, Iowa and New York used the tax revenues from rental cars for other transportation funding projects. A few other states such as North Carolina and Montana use the tax revenues for general funding projects as long as the legislature allows it.
Actions by the state
Approximately 15 states local governments have allowed rental car companies to impose their own fees and taxes. They are allowed to charge add-ons such as insurance coverage, off-site rentals or even airport surcharges. Several other cities use these taxation rights to gain tax revenues for special projects such as construction of a particular establishment. However, there are members consisting of manufacturers, rental car companies and dealers that are against these taxes when in comparison to other industries.
During the year of 2011, Hawaii had to increase the taxes and fees in order to raise more revenues. The same took place in the state of Minnesota during the year of 2013. In Connecticut the rental surcharge is 3% of the cost for car renting for 30 days or less. There is a tourism surcharge of $1 for leasing or renting for 30 days or less. In Louisiana, the state tax is 2.5% whereas the local tax is just 0.5%. Ohio the sales state tax is subject to 5.75%. However, in Virginia, the rental taxes, fees and the local taxes were controlled by the Virginia Department of Taxation.
Actions by the federal legislation
The federal legislation was against the discriminatory method of taxing the rental car companies which brought into discussion during Congress during 2011 and 2013. A study was conducted about this matter in 2009, which concluded that as the taxes increased, the demand decreased.
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