Car-rental companies say higher tax will hurt locals, too

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A proposal by the city of Indianapolis to raise the local tax on car rentals is drawing the ire of the industry, which argues the increase will affect the local population as much as visitors.

Mayor Greg Ballard and City-County Council President Maggie Lewis on Monday announced an agreement on the city's $1.1 billion budget that calls for raising local car-rental taxes and the city’s admission tax to avoid a potential reduction in services. The proposal still must be approved by the council.

The local tax on car rentals would increase to 6 percent from 4 percent. Combined with 4-percent state rental tax and the 7-percent state sales tax, Marion County car-rental customers would pay a combined 17-percent tax after the increase.

Without the raise, the 15-percent car rental tax rate already accounts for Indianapolis’ being ranked No. 8 on the Global Business Travel Association's list of the worst 10 cities for travel taxes in 2012. The group also considered Indianapolis' 9-percent tax on food and beverages and its 17-percent tax on hotels when making the ranking.

Visit Indy, the city's tourism agency, typically favors proposals that support the Capital Improvement Board of Marion County, spokesman Chris Gahl said. The CIB, which collects the car-rental tax, funds half of the agency’s operating budget.

The CIB oversees Lucas Oil Stadium, Bankers Life Fieldhouse and the Indiana Convention Center. It collected $2 million in car-rental taxes in 2011. Last year’s collection figures are not yet available.

“We are positioned and seen in the visitor’s mind as a high-value destination, even taking into consideration the hotel tax and the projected [higher] car rental tax,” Gahl said.
A study released last month by Visit Indy estimated the economic impact of the tourism industry increased 10 percent in 2011, to $3.95 billion. An estimated 22 million visitors came to the city, most of them for leisure activities.

Gahl said Visit Indy plans to convene its executive committee to study the proposal to raise the car-rental tax.

The car-rental industry opposes a tax increase, arguing that it affects local residents as well as out-of-towners.

“It’s flat out discriminatory and unfair,” said Laura Bryant, a spokeswoman for St. Louis-based Enterprise Holdings Inc., which operates the Enterprise-Rent-A-Car, Alamo Rent A Car and National Car Rental chains.

The three combined have 24 locations in Marion County that would be affected by the tax increase.

Enterprise Holdings and its competitors have argued in recent years, as more cities turn to rental-car taxes to raise revenue, that the taxes may cause more harm than good.

Though local politicians routinely market the levies as so-called travel or hospitality taxes on visitors, more than half of car rentals are actually local, industry figures show.

Indianapolis-based Ace Rent A Car, for instance, rents cars every week to motorists whose vehicles are being serviced or repaired following an accident, said Charlie Mullen, co-owner of the local chain.

“We do a lot of replacement rentals,” he said, "so everybody pays.”

Nationwide, more than 100 car-rental excise taxes have been enacted across 43 states and the District of Columbia in recent years, raising more than $7.5 billion, according to the industry.

The American Car Rental Association last year supported federal legislation that would prohibit future “discriminatory taxes” imposed upon car rental customers by state and local governments. The proposal failed to advance out of a House committee.

Meanwhile, the tax on tickets to attend Indianapolis Colts and Indiana Pacers games would rise to 10 percent.



  • singapore tour
    I want to make sure that it is very important to see whether or not his is something that is going to improve in many way.
  • Oh, I get it...
    ...it's Orwellian because the CIB only improves the capital of Jim Irsay and Mel Simon rather than the capital of the public, whom it is said to represent.
  • Orwellian CIB
    The real issue is the existence of the CIB and the phony tourism industry - an industry supported totally by tax dollars, with profits going to billionaire sports team owners and hotel chain owners, with a few wage slaves sweeping up the crumbs.
  • Council
    First, while Ballard earns most of the blame for this proposal (has the man ever met a tax or fee he didn't want to increase?), Republicans and some Democratic councilors are also supporting it. Second, it is clear that neither the Mayor or Council members care one bit that these taxes hit locals far more than "visitors." Their goal is to put more money in the pockets of the CIB so the CIB has the money to give millions out to the Pacers and Colts. The CIB is the absolute worst gov't (or quasi gov't) entity in the city/county. The CIB leadership appointed by Ballard, Bob Grand and Ann Lathrop, have proven to be completely disinterested in doing what is best for the public.
  • Car rental rates
    The city of Indianapolis seems to want to get out of town visitors to return to all events in this city. Why would they raise the rates on car rentals. This would tend to keep tourists trade down.
  • Ridiculous!
    I recently rented a car from the airport ( I live in Indy) and it was almost double the estimated cost due to all the taxes surcharges and fees. I've never seen so many different taxes for one thing. I will definitely be limiting my use of car rentals. I am willing to contribute to reasonable taxes and participate in making Indy a nice place to live, but this is out of line. Lets focus on reducing spending and especially irresponsible spending!
  • So Republicans want to raise taxes
    Perfect example of how this hurts everyone: My car has to go in to the shop for repairs and an insurance company is providing me a rental. This car is being rented from a car rental company in Indianapolis. Now, when taxes are raised on rental car companies, the cost of the rental to the insurance company will increase, therefore premiums will increase to cover the new fees, therefore I will pay those increased premiums. So thanks for raising taxes, republicans. Isn't that supposed to be one of the reasons to vote republican? I guess when you're preoccupied with forcing children to learn a communication style as outdated as the telegraph (cursive) and adding amendments to the constitution for which we already have a law on the books to prevent (gay marriage), you lose the focus on your party's core values.
  • sorry
    When you are in the travel industry, tough sow said the cow.
  • Unintended Consequences
    This is what happens with such narrow-focus tax policy. Indiana and all the locals need to seriously rethink their approach to revenue...and stop wasting money. Broadest possible consumption tax, on everything, even used goods, durable goods, food, meds, literally everything, makes much more sense, and would be a vastly lower rate. It's far past time to repeal all these nit-pick taxes and replace the whole lot with broader application of the sales tax and stop this madness.

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  1. Aaron is my fav!

  2. Let's see... $25M construction cost, they get $7.5M back from federal taxpayers, they're exempt from business property tax and use tax so that's about $2.5M PER YEAR they don't have to pay, permitting fees are cut in half for such projects, IPL will give them $4K under an incentive program, and under IPL's VFIT they'll be selling the power to IPL at 20 cents / kwh, nearly triple what a gas plant gets, about $6M / year for the 150-acre combined farms, and all of which is passed on to IPL customers. No jobs will be created either other than an handful of installers for a few weeks. Now here's the fun part...the panels (from CHINA) only cost about $5M on Alibaba, so where's the rest of the $25M going? Are they marking up the price to drive up the federal rebate? Indy Airport Solar Partners II LLC is owned by local firms Johnson-Melloh Solutions and Telemon Corp. They'll gross $6M / year in triple-rate power revenue, get another $12M next year from taxpayers for this new farm, on top of the $12M they got from taxpayers this year for the first farm, and have only laid out about $10-12M in materials plus installation labor for both farms combined, and $500K / year in annual land lease for both farms (est.). Over 15 years, that's over $70M net profit on a $12M investment, all from our wallets. What a boondoggle. It's time to wise up and give Thorium Energy your serious consideration. See http://energyfromthorium.com to learn more.

  3. Markus, I don't think a $2 Billion dollar surplus qualifies as saying we are out of money. Privatization does work. The government should only do what private industry can't or won't. What is proven is that any time the government tries to do something it costs more, comes in late and usually is lower quality.

  4. Some of the licenses that were added during Daniels' administration, such as requiring waiter/waitresses to be licensed to serve alcohol, are simply a way to generate revenue. At $35/server every 3 years, the state is generating millions of dollars on the backs of people who really need/want to work.

  5. I always giggle when I read comments from people complaining that a market is "too saturated" with one thing or another. What does that even mean? If someone is able to open and sustain a new business, whether you think there is room enough for them or not, more power to them. Personally, I love visiting as many of the new local breweries as possible. You do realize that most of these establishments include a dining component and therefore are pretty similar to restaurants, right? When was the last time I heard someone say "You know, I think we have too many locally owned restaurants"? Um, never...