Destroying the Tourism Industry One Tax and Fee at a Time

States and localities have long thought that they had a sure way that they could raise revenues without incurring the wrath of their constituents. They'd simply tax the bejeebus out of anyone coming to visit from out of town.

They'd impose taxes on airport access, car rentals, meals, and hotel stays, to cover operating costs, or to fund new projects.

Boston's Mayor Thomas Menino is pushing to do just this in to the teeth of a recession all while the hotel and tourism industry is reeling as people stay home instead of traveling.

Currently, the meals tax is 5 percent. Beginning Aug. 1, the tax jumps to 6.25 percent. Under the mayor's proposal, an additional hike would bring the tax to 7 percent, effective Oct. 1.

As for hotel taxes, the current rate is 12.45 percent. If the plan is approved, the tax will jump to 14.45 percent.

Wisconsin just raised its car rental taxes significantly - from $2 to $18, to fund the construction of a rail link.

All over the country, states and localities are raising taxes and fees to balance their budgets, or to pay for new projects:

Popular tourist destinations were hit especially hard. Among places where taxes rose:

•Hawaii. The hotel room tax increased from 7.25% to 8.25% on Wednesday and will rise to 9.25% in July 2010.

•Nevada. The room tax will increase up to 3 percentage points, to a maximum of 12%. In Las Vegas, the hotel tax jumps from 9% to 12%. Reno's tax was already 12% and is not scheduled to change.

•New Hampshire. The tax on rooms and restaurant meals rose from 8% to 9% and was extended to include recreational vehicles at campgrounds.

•Massachusetts. Cities were given authority to raise the hotel tax from 4% to 6%, in addition to the state tax of 5.7%. Taxes on eating out will rise from 5% to 6.25% statewide, plus another 0.75% if cities choose.

•New York City. The city, which raised its hotel tax March 1 to 14.25%, not counting other fees, will start charging more for Internet reservations.

It that adds up to a significant chunk of the cost for a typical trip.

I take regular trips every year for leisure and have found that 30% of the costs to rent a car take the form of taxes and fees not imposed by the rental company but by the locality or state. It's insane. These localities are taxing me for the privilege of coming to their localities to spend my money on businesses and enterprises in their areas for a period of time before returning home.

I'm not alone in finding this situation infuriating. The recession is leading car rental companies to reduce their inventories, pushing the prices for the car rentals up, which only adds to the taxes owed on said rentals, and increasing the overall cost for a vacation.

There I was, going over a pending car-rental reservation and grumbling over the profusion of fees and taxes that increased my base rate by another 42 percent.

There was, of course, state tax (8 percent), county tax (1.5 percent) and city tax (1.5 percent). There were also the usual-suspect add-on fees, including an airport concession recovery fee (11.11 percent), customer facility charge ($3.50 per day) and vehicle licensing fee ($.20 per day), all of which were unavoidable as there was no convenient non-airport location.

There is one way I've found that can help reduce the overall cost of car rentals, and that is to buy Entertainment books annually. Since I take trips every year and make other purchases from the books, they more than make up for the $30-40 the books can cost. In fact, the Entertainment book more than pays for itself when booking car rentals. They have special rates that can save anywhere from $40-100 for a car rental over what you might find using Kayak, Orbitz, or any of the other travel websites, including Priceline. You have to play around with the various coupon codes offered, and might find that a 2-car class upgrade does better than 10% or 15% off for a weekly rental or vice versa, depending on which rental company you go with.

Still, those taxes and fees are unavoidable, and they mean that I have less money to spend on trinkets or restaurants or other items during the course of my stay.

So, while Boston looks to raise its taxes, it has a ways to go to being the highest tax burdened jurisdiction for travelers. That distinction goes to Chicago, which imposes more than $40 in taxes per day on tourists.