San Mateo County Rental Car Taxes Defeated at Ballot Box

November 7, 2008

A reader points us to two ballot initiatives hiking taxes on parking lots and rental cars in San Mateo County, California that failed on Tuesday. Measure Q would have imposed an 8% gross receipts tax on commercial parking facilities (San Francisco International Airport is located in San Mateo County), which failed by a vote of 47.9% to 52.1%. Measure R would have imposed a 2.5% gross receipts tax on rental cars, but failed 47.5% to 52.5%. The county hoped to use the $28 million raised by the taxes to close its budget shortfall.

Excise taxes like taxes on rental cars are increasingly used as a way to shift punitive tax burdens to non-constituents like tourists. This is dangerous because it allows people to consume more government than they are willing to pay for, and assume incorrectly that there is such a thing as a free lunch. If San Mateo County’s taxes aren’t enough to cover the spending San Mateo County citizens want, they should either be willing to raise broad-based taxes on everyone or cut spending.

After all, we’re all tourists to everyone else, and if everyone shifts huge taxes to tourists, we all pay in the end.

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A 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.

An excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections.