Travel Taxes: High, Only Partially Avoidable

You’ll pay more than $40 a day in taxes to visit Chicago. That’s the most highly taxed big city in the United States, according to a new report from the Global Business Travel Association (GBTA). At the other end of the scale, four big South Florida cities, three California cities, Portland, Oregon, and Honolulu all hit you for less than $25 a day. Those numbers are for total taxes—regular sales taxes plus special travel taxes—for a typical business traveler’s day of restaurant meals, a rented car, and a hotel night.

In a breakdown, GBTA reports that “discriminatory travel taxes,” or taxes specifically levied on restaurants, hotels, and rental cars, top out at $22 per day in Portland (where there is no sales tax), are lowest in Burbank, California, and are $7 or less in a handful of California and Florida cities.

GBTA sent out a release on the data, presumably targeting the consumer as well as the industry press. But, to me, the story is a bit more complicated than you might think. The basic fact of travel is this: If you have a business meeting in Chicago, have relatives there, or want to pick up a Cubs game at Wrigley, you don’t go to Ft. Lauderdale instead because the taxes are lower. The main targets of this report are the folks who plan and organize meetings and conventions, for whom Portland or Detroit might well be a practical alternative to Chicago, New York, or Boston. As a more typical leisure and business traveler, however, you don’t often have that kind of choice. But you do sometimes have the opportunity to lower your travel taxes by renting a car at a low-tax venue close to your real destination or staying in a hotel in a nearby, lower-tax area.

Renting a car at a low-tax airport is feasible whenever another larger airport is close to your ultimate destination. I ran some tests on a one-day rental for a midsize car on October 30, which is a weekday. In the U.S., the biggest difference I found was in Chicago, where you can escape the punitive daily rate of $106 at O’Hare if you use nearby Milwaukee as your gateway—you’ll spend less than half, at $48 a day. Elsewhere, in the Boston area, rates range from $51 a day at Manchester and $62 a day at Providence to $78 a day at Logan. In the New York metro area, a day rental costs $58 at Newark compared with $114 at JFK. And in Washington, the rate at Reagan National was $78 compared with $89 at Baltimore and $106 at Dulles.

Overseas, the most notable example is at Geneva, where the airport terminal is mostly in Switzerland but extends into France. For a one-week rental starting October 22, Auto Europe quotes rates of $345 on the Swiss side and $218 on the French. Basel/Mulhouse is a similar dual-nationality airport. Also, if you can use Geneva as a gateway to Italy’s Val d’Aosta, as I recently did, you can avoid paying $583 at Milan. At Gibraltar, the airport rate is $147 but the rate in adjacent Algeciras, Spain, is $253. Unfortunately, there aren’t many other destinations where the airport or nearby airports are in different states or countries, so there is limited opportunity to use this ploy.

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Don’t necessarily rely on my one-shot findings as an accurate guide for the exact prices you’ll find at different times and for different durations. But they do show that differences can be enough to make you at least think about an alternative airport.

Hotels, on the other hand, don’t usually work that well. Sure, you can avoid New York’s high taxes by staying at Newark Airport, for example, as one tight-fisted traveler I know does. But for most of you, that entails spending too much money and far too much time schlepping on trains and subways if you really want to be in Manhattan. My suggestion: Try it with a rental car, but for a hotel, find a budget option in the city where you really want to be.

Ed Perkins Seniors on the Go is copyright (c) 2012 Tribune Media Services, Inc.

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