How much of a substantial increase? Travel-based taxes can add up to 30% of the bill. An average trip from Los Angeles to New York City results in a 17% tax rate on all expenses, with 50% of this tax aimed directly at travelers.
A National Center for Policy Analysis report calls this form of taxation discrimination a "perfect trifecta" consisting of:
- Hotel occupancy taxes: 22 states levy a statewide tax on lodging ranging from 3% to 13%. Cities also levy lodging taxes, with rates as high as 14%.
- Car rental taxes: These taxes can add 25% to rentals within the area of the tax.
- Airline taxes: Federal taxes on airline travel now can amount to a 30% surcharge.
Unfortunately, those taxes have the following effects:
- lower revenue from excise and sales taxes on souvenirs;
- lower tourism levels; and,
- people taking fewer short vacation trips.
The NCPA study concludes: "While travel taxes may seem politically attractive, it is clear that they have an economic cost."
Really? Who'd ever have thunk that? Certainly not all of those local politicians who treat the wallets of travelers as a bottomless source of tax $$$s.
Econ 101 calls it the "law of supply and demand."
Let the discussion begin...
To read the NCPA report, click on the following link:
"Travel Taxes: The Hidden Trifecta."