KingPriest2
07-20-2006, 11:11 AM
http://www.kansascity.com/mld/kansascity/business/15060041.htm
KC car-rental fees taxing customers away?
By RICK ALM and DAVE HELLING
The Kansas City Star
Economic Effects of Car Rental Excise Taxes (.pdf)
Are higher car-rental taxes chasing customers away from Kansas City?
Two economists — working for the city’s biggest rental-car provider — contend the answer is yes.
William G. Gale of the Brookings Institution and Kim Reuben of the Urban Institute say the $4-a-day fee approved by voters to build the Sprint Center arena has convinced some renters to look for cheaper costs in the suburbs.
Their study, published Monday, compared car rentals at Enterprise Rent-A-Car locations inside and outside the city limits — excluding the airport. It found average rentals at seven Kansas City neighborhood stores lagged those at 22 Kansas-side locations and 20 suburban Missouri-side locations that don’t charge the arena tax.
“The rental tax in Kansas City is driving people out,” Reuben said.
City leaders who read the report said they had no quarrel with the statistics, but said the study is incomplete and “disingenuous” because it left out rentals at the airport. They noted total tax revenue from airport rentals for the first five months of this year is up 12 percent from 2005.
“We’re on target to pay the bonds at the Sprint Center,” said mayoral adviser Steve Glorioso.
City finance director Deb Hinsvark also defended use of a car tax to pay part of the arena’s cost.
“When you are a major metropolitan area, you have to be alive and creative (in financing projects),” she said. “We’ve added a $300-million-plus asset to the city and the state.”
The study was financed by St. Louis-based Enterprise, the nation’s largest rental agency, and was released Monday at the National Business Travel Association convention in Chicago. The association earlier this year launched a public education effort against what president Suzanne Fletcher called “travel tax creep” that she says is eating into the industry’s bottom line.
Two years ago Enterprise led the campaign against Kansas City’s car rental fee proposal, a key part of the financing for the $276 million downtown arena. In that campaign, the company argued that the tax burden would fall more heavily on local residents than on tourists.
The researchers agreed. They pointed to scores of similar car rental taxes in 38 states — examples of so-called “easy money” financing strategies often imposed to pay for new stadiums or other civic projects. They concluded that “the widespread perception that such taxes are paid by tourists or business travelers” is wrong.
“The vast majority of customers … are locals, not out-of-towners,” the report said.
Specialty taxes like Kansas City’s fee on car rentals amount to “piling on” and are “discriminatory and based on unsound tax policy,” the researchers said.
Taxes should either be broad-based and paid by everyone, they said, or tightly targeted at those that receive the greatest benefits. In the case of the Sprint Center, for example, they said a user tax could be imposed on each ticket sold.
“Kansas City is just one example,” said Enterprise spokeswoman Laura Bryant. “There are 83 of these (car rental taxes) across the country” and 24 others are under consideration.
“This is a national epidemic,” Bryant said. “It is part of a disturbing trend of putting tax burdens on just one segment of society.”
Glorioso accused the company of replaying the bitter arena tax campaign.
“Enterprise has fought this from the day voters approved it,” he said. “We had a debate on the equity of this tax, and the voters sided with the city and not Enterprise.”
The study measured rental rates and other factors during the three years prior to the tax compared with the first six months of collection with the new levy. It did not attempt to follow specific transactions to determine how renters reacted to the new tax.
Kansas City allocates $3.50 of each $4 to the Sprint project and 50 cents to Kansas City Convention & Visitors Association to promote and advertise the city.
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KC car-rental fees taxing customers away?
By RICK ALM and DAVE HELLING
The Kansas City Star
Economic Effects of Car Rental Excise Taxes (.pdf)
Are higher car-rental taxes chasing customers away from Kansas City?
Two economists — working for the city’s biggest rental-car provider — contend the answer is yes.
William G. Gale of the Brookings Institution and Kim Reuben of the Urban Institute say the $4-a-day fee approved by voters to build the Sprint Center arena has convinced some renters to look for cheaper costs in the suburbs.
Their study, published Monday, compared car rentals at Enterprise Rent-A-Car locations inside and outside the city limits — excluding the airport. It found average rentals at seven Kansas City neighborhood stores lagged those at 22 Kansas-side locations and 20 suburban Missouri-side locations that don’t charge the arena tax.
“The rental tax in Kansas City is driving people out,” Reuben said.
City leaders who read the report said they had no quarrel with the statistics, but said the study is incomplete and “disingenuous” because it left out rentals at the airport. They noted total tax revenue from airport rentals for the first five months of this year is up 12 percent from 2005.
“We’re on target to pay the bonds at the Sprint Center,” said mayoral adviser Steve Glorioso.
City finance director Deb Hinsvark also defended use of a car tax to pay part of the arena’s cost.
“When you are a major metropolitan area, you have to be alive and creative (in financing projects),” she said. “We’ve added a $300-million-plus asset to the city and the state.”
The study was financed by St. Louis-based Enterprise, the nation’s largest rental agency, and was released Monday at the National Business Travel Association convention in Chicago. The association earlier this year launched a public education effort against what president Suzanne Fletcher called “travel tax creep” that she says is eating into the industry’s bottom line.
Two years ago Enterprise led the campaign against Kansas City’s car rental fee proposal, a key part of the financing for the $276 million downtown arena. In that campaign, the company argued that the tax burden would fall more heavily on local residents than on tourists.
The researchers agreed. They pointed to scores of similar car rental taxes in 38 states — examples of so-called “easy money” financing strategies often imposed to pay for new stadiums or other civic projects. They concluded that “the widespread perception that such taxes are paid by tourists or business travelers” is wrong.
“The vast majority of customers … are locals, not out-of-towners,” the report said.
Specialty taxes like Kansas City’s fee on car rentals amount to “piling on” and are “discriminatory and based on unsound tax policy,” the researchers said.
Taxes should either be broad-based and paid by everyone, they said, or tightly targeted at those that receive the greatest benefits. In the case of the Sprint Center, for example, they said a user tax could be imposed on each ticket sold.
“Kansas City is just one example,” said Enterprise spokeswoman Laura Bryant. “There are 83 of these (car rental taxes) across the country” and 24 others are under consideration.
“This is a national epidemic,” Bryant said. “It is part of a disturbing trend of putting tax burdens on just one segment of society.”
Glorioso accused the company of replaying the bitter arena tax campaign.
“Enterprise has fought this from the day voters approved it,” he said. “We had a debate on the equity of this tax, and the voters sided with the city and not Enterprise.”
The study measured rental rates and other factors during the three years prior to the tax compared with the first six months of collection with the new levy. It did not attempt to follow specific transactions to determine how renters reacted to the new tax.
Kansas City allocates $3.50 of each $4 to the Sprint project and 50 cents to Kansas City Convention & Visitors Association to promote and advertise the city.
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