Barnett on Business Travel
BUSINESS TRAVELERS FACE
NEW HIDDEN FEES AND TAXES
BY CHRIS BARNETT
July 28, 1991 -- Here's a new extra that car rental companies aren't promoting, or rarely divulging, until you return your wheels: A surcharge of $1 or $2 a day or more tacked onto your bill in a growing number of cities and states.
Rent a car in Minnesota for a day or longer and you're socked a flat fee of $7.50. In Chicago, it's $2.75 a contract. Visit Walt Disney World for a week and rent a car in Orlando - or anywhere in Florida - and you'll shell out another $14 or $2 per day. In Cleveland, it's $3 per rental; $2 a day in Hawaii.
What's more, Illinois is pushing to impose a rent-a-car tax that, if blessed, would have the effect of slapping two taxes on anyone renting a car in the Chicago city limits.
Nevada lawmakers are trying to impose a $1 per day surcharge. Other cities and states also are trying to tunnel into the traveler's wallet. At the moment, soaking the automobile renter seems to be the easiest route.
Do not blame Hertz, Avis, National, Budget or any of the other car rental companies. They hate the fees and don't pocket a penny of the loot. But they do collect a carload of complaints.
At the West Palm Beach Airport recently, I griped about the $2-a-day tariff that was only disclosed to me via a sign on the check-in counter. Worse yet, nobody could explain where my $2 was going.
The cash seems to be earmarked for a variety of projects normally funded out of state or municipal revenues. Arizona's $2.50-a-day car- rental surcharge promotes Cactus League baseball. Florida's tax supposedly fights the state's rampaging drug problem. The Minnestoa fee is said to pay for a "megamall." And Illinois claims its rent-a-car surcharge will pour into a fund benefiting Operation Desert Storm vets.
What's going on here?
It's the newest revenue grab by local lawmakers who want to raise money without angering their voters. And tourists and travelers are prime pigeons who can be easily plucked, say car rental officials.
"States, already faced with diminished federal funding, now see other tax revenues declining because of the recession," explains Joe Russo, a Hertz vice president. "Politically, they don't want to tap their constituents for more money. So who's better than the visitor from out of state who can pay but doesn't vote locally?"
Russo frets that more cities and states will jump on the surcharging bandwagon.
"The risk for the states, though, is that before long you're going to have people figuring, 'How much does it really cost me to travel to that destination.' If some other place is equally attractive and fun, and you're not being clobbered with high hotel occupancy taxes and rent-a-car surcharges, you may change your plans."
For business travelers on budgets or per diem, the growing surcharge trend is only worsening. Travelers who try to save money by using off- airport car rentals are being stiffed anyway. More than 80 airports impose fees averaging 6 percent to off-airporters just for the privilege of picking up and dropping off passengers. Car rental firms are passing the tax on to customers.
It doesn't always work. A Florida judge recently stopped the Jacksonville Airport Authority from levying a 6 percent tax on off-airport renters, but the airport is appealing the case. These taxes alone are said to be costing consumers - mostly cost-conscious travelers - an estimated $500 million a year.
In France, travelers have received some relief. A 30 percent value-added tax on car rentals has been abolished.
Still, travelers are heavily taxed and surcharged today, and it's only getting worse.
So-called bed taxes are a fact of life today. For example, Houston charges hotel guests 14 percent. Dallas and San Antonio levy 13 percent. Atlanta, San Francisco, Philadelphia and Miami charge 11 percent. Not much you can do about it short of bunking in with a friend.
Check into a New York City hotel room that costs over $100 a night and you'll pay a whopping 21.25 percent in taxes for every day you stay there. The breakdown: 8.25 percent state sales tax, 6 percent plus $2 for the city hotel occupancy tax, commonly called a "bed tax," and 5 percent state occupancy tax.
"We don't like it one bit," says a spokeswoman for the New York City Convention and Visitors Bureau. "What makes it so unfair is that you can't get a good room in New York for under $100."
But doesn't a big chunk of that tax go toward promoting tourism?
"We get one-quarter of 1 percent," she says.
New York City's Convis staffers are lobbying to reduce its tax. Meanwhile, they hand out lists of "summer freebies." Sample: performing arts concerts that Celebrate Brooklyn and concerts at the Abby Rockefeller Sculpture Garden.
Still, this year, travelers seem to be fed up with being dollared to death with nuisance fees, and they're fighting back.
Connie King, president of Constance, a Chicago antique and home furnishings store, complains that the "access costs on telephone bills really hacks me off. It infuriates me."
King, who travels extensively and picks up her own costs, uses a public phone in the lobby to return a stack of long-distance calls.
You simply have to audit every charge on your hotel bill these days, insists Jody Kendrick, a Dallas advertising executive. She says a little card in her room at the Grand Hyatt stated there was no access charge on an 800-number call.
"I used my 800 access number to connect with Sprint to make my calls, but when I checked out there was a 75-cent charge on every call. I told the manager that was false advertising and he took the charges off my bill, but I did have to argue a little."
It's no secret that hotels look for ways to recapture some of their telephone equipment and staff costs, but it doesn't have to work that way.
A smart strategy: Ask the hotel operator to connect you to your long-distance carrier, explain to that operator you didn't want to dial through the hotel's phone system and you'll get operator-assisted service at a station-to-station rate and no access charge. It works, and it can save you a bundle if you're working from the road.
Other hidden and not-so-hidden charges:
A $2-per-day "air-conditioning fee" charged by many hotels in Jamaica.
Ten percent to 15 percent "service charge" imposed in addition to the tax at checkout on certain hotel bills in many Mexico resort cities.
Drop-off fees on hotel "courtesy" van runs to the airport.
Fifteen percent gratuities automatically added on to room service bills without notation. Guests often add another 15 percent to the bill, which also includes a delivery charge, and the tip can be 30 percent plus.
Travelers, of course, pay a slew of other taxes and tariffs today but it goes - and varies - with the territory. Not much you can do about the roughly $20 (U.S.) it costs to depart Hong Kong's Kai Tak Airport except stay there.
But can you deduct it from your federal and state income tax at year end?
"If you're on a business trip and can substantiate it, all fees, taxes and surcharges are deductible," says Jeff Tiret, a CPA and principle with Tiret Accountancy in San Francisco. "But if you're on a vacation or personal pleasure trip, none of these taxes, fees or costs of any kind can be deducted."
The only remedy against these mini rip-offs: Be aware of them and budget for the fees that can't be avoided and keep a sharp watch on those that can be dodged.
This column originally appeared in the Albany Times Union.
Copyright © 1990-2009 by Chris Barnett. All rights reserved.