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Defusing a Travel Tax Bomb
Opinion · March 7, 2004

By almost any measure, traveling should be a pleasure these days. Air fares, hotel room rates and cruises haven't been this affordable in years. Complaints against domestic air carriers are at an all-time low. And the travel industry, badly hurt by a double-whammy of a recession and war, is finally recovering.

So what's with all the anger? Why are passengers hurtling insults at their cabin crew with greater frequency? Why are they driving their SUVs into airport ticket counters and setting them on fire, as one man recently did in Maui?

Maybe it's because there's a lingering feeling that travelers are still being taken advantage of.

They are. Car rental customers are subsidizing everything from sports stadiums to convention centers. Airline passengers are paying for home improvements. Hotel guests are footing the bill for almost anything imaginable. If you don't travel, there's no need to feel left out - as an American taxpayer, you're propping up several failing airlines.

So instead of whining about taxation without representation, some of us just clock a crewmember. Isn't there a better way to go about it?

Possibly. Part of the problem is that travelers are battered by surcharges and fees that they neither approved of, nor really benefit from. Take rental cars, for example. A recent study by the Web site Travelocity found that the motorists pay an average of 24.4 percent in taxes and surcharges over the base rate when renting at a major American airport. The most taxing state is Texas, where consumers are charged a 51.7 percent markup on rental cars. In Austin, Dallas, Houston, and San Antonio, travelers are footing the bill for new sports facilities - projects they would never willingly underwrite.

The same goes for airline tickets. Passengers pay a variety of taxes, including an amorphous passenger facility charge, or PFC, of up to $18. Few travelers actually know what the PFC is used for, and it's just as well. Although it can cover everything from improving airport safety to expanding facilities, the proceeds can go to some less conventional causes. At the Minneapolis-St. Paul International Airport, for instance, the fees are reportedly used to insulate thousands of houses under the airport's flight paths. Certainly, that's a worthy project. But should passengers be funding someone else's home renovations?

Hotel guests are also unfairly taxed. As with rental cars and airline tickets, a significant portion of the money collected in the form of bed taxes is actually spent on things visitors will never use. In Alexandria, La., the city's Economic Development Authority recently approved a 3 percent hotel tax that would go toward "undetermined economic development efforts." In suburban Chicago, $5.2 million in hotel taxes are being used to build a new stadium at Benedictine University. Knoxville, Tenn., which at 17.5 percent has the highest hotel tax in the nation, is using the money to fund everything from a county fair to a convention center.

Travelers shouldn't have to pay for someone else's recreational fund, stadium fund, or slush fund.

But nowhere is taxpayer money more wasted than bailing out our failing airlines. United Airlines, which didn't get the $1.8 billion in federal loans it asked for in 2002 and promptly filed for bankruptcy protection, is now on the verge of securing a revised $1.6 billion bailout package. Never mind that many critics - including several airlines - think the money would be wasted on an airline that continues to operate inefficiently. US Airways, the recipient of almost $1 billion in government-backed loans, remains in danger of default as it struggles to pull itself back from the brink of insolvency.

Taxpayers shouldn't subsidize the sad circus these money-losing legacy airlines have become.

In an ideal world, none of these taxes would be imposed on travelers. And the money that's collected wouldn't be frittered away on pet causes - or hopeless ones. But in the real world, it's still possible to placate angry visitors and maybe prevent yet another ramming-the-ticket counter incident.

How about using the taxes to actually improve the travel experience? Revenues from visitors should be directly used to build and maintain roads, airports and ports. They ought to fund state tourism organizations which not only promote an area, but also assist guests and act as advocates for them. There also needs to be better accountability - a disclaimer on a bill that tells a traveler exactly what the funds are being used for.

The taxing authorities who believe they owe their visitors no explanation - or anything else for that matter - shouldn't be surprised when their tourism numbers sink and the few business travelers who remain are left embittered by the onerous and unjust charges.

Christopher Elliott is a travel commentator based in Key Largo, Fla. All e-mailed questions may be edited, condensed or republished at the site's discretion.

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