Research Finds That Taxes Targeting Travel Services Increase Cost by 56%
Industry Says High Discriminatory Travel Taxes Deter Meetings, Harm Local Economy
Alexandria, VA (August 5, 2010) – The NBTA Foundation, the education and research foundation of the National Business Travel Association (NBTA), and Concur (Nasdaq: CNQR), the world's leading provider of on-demand Employee Spend Management services, today released the updated findings of an annual study of car rental, hotel and meal taxes in the top 50 U.S. travel destination cities. The study reveals that the discriminatory travel taxes and fees enacted on travel-related services – often to fund unrelated local projects – impose an average increased cost on visitors of 56% over general sales tax.
The full report is available exclusively to Concur clients and NBTA members and offers detailed insight for travel managers interested in understanding the impact that these taxes have on their business travel spend.
NBTA Executive Director & COO Michael W. McCormick said, “The business and travel communities are increasingly concerned about the negative impact that taxes targeting travelers have on the greater travel industry and local economies. It is unacceptable that visitors, whose general tax dollars can help to keep a community afloat in difficult economic times, are forced to pay so much more taxes and fees to fund projects unrelated to the services they purchase. On average, the fees targeting travel services increase the tax burden by more than half, and in the worst cases, by up to 144 percent. Rest assured, companies are taking notice of these unfair burdens when determining how and where to spend their business travel, meetings and events dollars.”
“For corporate travel managers and their companies, the rising cost of business travel, meetings and events continues to be an area of focus and concern,” said Rajeev Singh, president and COO of Concur. “This is especially true this week, as the business travel industry gathers in Houston for the NBTA Convention. Our entire industry benefits from the kind of research that the NBTA Foundation conducts, and Concur is proud to once again sponsor this report, in hopes that it helps our clients and NBTA members around the globe to better manage their T&E spend and drive costs out of their businesses.”
The study provides several different views of travel taxes to help readers make informed choices. The top 50 markets are ranked by overall travel tax burden, including general sales tax and discriminatory travel taxes, and by discriminatory travel tax burden, excluding general sales taxes to count only taxes that target car rentals, hotel stays and meals. Separate data are offered for central city and airport locations, as the tax regimes are often distinct.
The research shows the U.S. cities where travelers incur the lowest total tax burden in central city locations, factoring in general sales taxes and discriminatory travel taxes, are:
- Fort Lauderdale, FL
- Fort Myers, FL
- Portland, OR
- Detroit, MI
- Honolulu, HI
The cities that impose the highest total taxes on travelers are:
- Chicago, IL
- New York, NY
- Boston, MA
- Seattle, WA
- Minneapolis, MN
Discriminatory travel taxes are those imposed specifically on travel services above and beyond general sales taxes. The U.S. cities with the lowest discriminatory travel tax rates in central city locations are:
- Orange County, CA
- San Jose, CA
- Burbank, CA
- San Diego, CA
- Ontario, CA
The cities that impose the highest discriminatory travel taxes on travelers are:
- Portland, OR
- Boston, MA
- Minneapolis, MN
- Indianapolis, IN
- New York, NY
McCormick added, “What many cities don’t realize is that these taxes are not only burdening business travelers, but local businesses pay the price, as well. In fact, most companies spend the majority of their car rental and hotel budgets in the communities in which they have offices. Ultimately, cities are hurting their economies two-fold, with hidden costs to local businesses and taxes out-of-town visitors will try to avoid.”