Thursday, April 16, 2009

The Problem With the Indianapolis Mayor Ballard's Proposal to Raise Rental Car Taxes

Anyone who has ever rented a car knows how excessively those cars are taxed. As part of his Capital Improvement Board bail-out plan, necessitated by the overly-generous Lucas Oil Stadium lease for the Indianapolis Colts and the apparent capitulation by the CIB on picking up the $15 million a year operating cost for the Conseco Fiedhouse for the Indiana Pacers, Mayor Greg Ballard has proposed raising the already high rental car taxes by 2%. This, we are assured, will only affect visitors to our city.

The claim did not ring true. I have rented a car several times from Indianapolis rental car firms. Sometimes my car is in a shop, or I want a newer, more reliable car for a lengthy, several day trip out of state. The presumption behind the tax increase proposal - that rental cars almost always involve out-of-towners renting a car in Indianapolis - seemed wrong.

It turned out my suspicion was correct. According to the National Business Travelers Association, most of the car rentals by NBTA members are actually from their local market. Further, a study by the Brookings Institute shows that increased rental car taxes dramatically affected their choice on car rentals. So much for the notion that an increase in rental car fees would only affect out-of-towners. Those rental car tax increases will affect local consumers and local businesses far more than advocates of the tax would like to think.

See: Taken for a Ride: Economic Effects of Car Rental Excise Taxes (2005)


Downtown Indy said...

Not only that, I sometimes rent a pickup truck from one of the car rental places to haul trash to the landfill, move furniture, or to get a load of mulch.

It's not clear to me, but I suspect this law would affect U-haul and the like, too?

I know said...

The good politicians will place a tax on the bike rental program next for the new trail and tell everyone only the tourists rent bikes all the while the government tells everyone the new trails are for a better quality of life for Indiana citizens.

What a racket to keep paying each others friends to steal!

What is worse in Indianapolis the mugging on the Monon or at the ballot box?

Downtown Indy said...

Look for a bicycle plate/permit system before long.

It's not a new idea - I can remember back in the early 60's when some towns in Bartholomew county had actual license plates that were attached to the back of bike seats.

I know said...

I rest my case!