In past research, we’ve often warned against the trend among lawmakers toward re-labeling taxes as “fees,” allowing them to surreptitiously increase revenues while hiding increased taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. burdens from taxpayers—violating basic principles of tax transparency.
Yet another example of this trend comes from Florida, where lawmakers are currently debating a special tax on rental car companies which many lawmakers are attempting to disguise as a “user feeA user fee is a charge imposed by the government for the primary purpose of covering the cost of providing a service, directly raising funds from the people who benefit from the particular public good or service being provided. A user fee is not a tax, though some taxes may be labeled as user fees or closely resemble them. .” The irony is that many of the new tax’s supporters are Republicans who’ve previously signed onto the famous “no-new-taxes” pledge by Grover Norquist’s Americans for Tax Reform. By arguing that the new tax is not really a tax, but instead is a “user fee,” Republican lawmakers have effectively abandoned their earlier promise. From the St. Petersburg Times:
With a week left in the 2006 legislative session, Republicans are pushing a proposed tax increase, and frustrated business lobbyists can’t stop it…
The proposal is a $2-a-day tax on rental cars in Florida, subject to the approval of voters in each county. The money would be used for roads and other local transportation needs…
Its Tallahassee champions include some Republicans who have eagerly signed a no-new-taxes pledge at Grover Norquist’s Americans for Tax Reform. The pledge says the undersigned “will oppose and vote against any and all efforts to increase taxes.”
Supporters variously refer to the proposed tax as a “surcharge,” “user fee” or “tool” to empower counties to control traffic.
They include House Majority Leader Andy Gardiner, R-Orlando, who sees no conflict between signing the pledge and promoting a rental car tax. “I don’t believe that empowering the people who sent me here is breaking that pledge,” he said.
Opponents include rental car companies, travel agents, AAA Auto Club South and Norquist’s group, who see an inconsistency.
“We were very surprised that a person who signed the tax pledge would sponsor such a bill. And disappointed,” said Rick Watson, who lobbies for Americans for Tax Reform. “It’s a sad day when a state awash in billions of new dollars is looking at increasing taxes.”
Gov. Jeb Bush used identical language six years ago when he blocked a proposal to tax cruise ship passengers to build a new stadium for the Florida Marlins. In an op-ed article in the Miami Herald, Bush said it was wrong “to put an additional tax on one industry and people who make South Florida their vacation destination.”
As for the rental car tax, Bush sounds skeptical, but he’s keeping an open mind. “I like the sponsors,” he said. “I’ve got a little bit of a problem with the concept.”
The bill’s sponsor? Rep. Rich Glorioso, R-Plant City. He, too, signed that no-new-taxes pledge, but says this is different because voters will have the last word.
“It’s up to the people,” Glorioso said.
Not exactly, says Van Poole, a former legislator and Republican Party chairman whose lobbying firm represents the rental car industry.
“You can slice it, dice it, cut it, it still comes out as nothing but a tax,” Poole says.
As we’ve argued before here and here, it’s impossible to justify these special excise taxes on the rental car industry on any sound policy grounds. They’re clearly designed as predatory measures aimed to tax visitors who aren’t able to hold lawmakers accountable through the electoral process. Unfortunately, they end up taxing many local residents as well, since industry figures show that roughly half of all rental car business is from local customers.
If public projects are really worthwhile expenditures of taxpayer dollars, better to rely on broadly based revenue sources that distribute tax burdens equitably, instead of heavily penalizing a politically out-of-favor industry with new taxes that are “user fees” in name only.
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