Taxman: Taxes and Fees on Travel Reaching the Tipping Point

It’s Tax Day in the United States – the dreaded day for many on which individual income tax returns are due to the federal government.

The Beatles 1966 hit song “Taxman” tells a story of despair at being overtaxed to the breaking point.

If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold, I’ll tax the heat
If you take a walk, I’ll tax your feet

The GBTA Foundation – the education and research arm of GBTA – annually tracks the tax burden imposed on business travel throughout the country. The study examines hotel lodging, car rentals and restaurant meal taxes in the top 50 U.S. destination cities, which are regularly used to fund local projects unrelated to tourism and business travel.

The 2013 study delved into travel taxes across the United States revealing some bad news: travel taxes are getting worse. In 2013, taxes levied specifically on travel-related services increased the total tax bill for a traveler by 58 percent. More and more, governments think the easiest way to raise money is to penalize business travelers. In fact, 30 cents of every dollar spent on business travel goes to taxes. On a typical $300 round-trip airfare, consumers pay more than $60, or 20 percent, in taxes and fees.

In the travel tax study, the top 50 U.S. markets are ranked by overall travel tax burden, including general sales tax and discriminatory travel taxes.

The top 10 U.S. cities where travelers incur the highest total tax burden in central city locations, factoring in general sales taxes and discriminatory travel taxes, are:

 

The top 10 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:

 

Municipalities are under pressure to raise revenue wherever they can, but imposing too heavy a tax burden on business travel is a shortsighted strategy. With taxes rising in every area of society, companies and travel managers are taking an increasingly hard look at the price they’re being asked to pay to visit any given city or region.

Federal, state and local governments should be applauded when they focus on promoting travel. Road warriors strengthen the economy, create jobs and drive economic security. Yet, governments insist on treating travelers like their ATM. GBTA is very concerned taxes and fees are approaching the tipping point that will ultimately push business travelers to stay at home. We all pay when governments take a short-sighted approach that raises the costs for business travel.