Trying to be frugal when traveling this summer? Here's a tip: walk.
Nationwide, the average tax rate on car rentals at the top 50 business travel airports has reached a staggering 13.8 percent — including state, local and car rental taxes — according to the National Business Travel Association. Worse: At several airports the rate is much higher, including Boston’s Logan International (25 percent), Chicago O’Hare (23.7 percent) and Phoenix’s Sky Harbor International (21.9 percent). That puts a $75 daily car rental at more than $90 in those places. Tax rates for renting a car in the city are comparable.
Painful? Yes. Surprising? No. As the U.S. struggles recover from recession, cash-strapped cities and states are doing all they can to bridge ugly budget gaps. Visitors are an easy mark for the taxman. “If you can levy taxes on tourists, you don’t have to levy as many taxes on your constituents,” says Curtis Dubay, a tax analyst at the conservative-leaning Heritage Foundation in Washington. No surprise then that car rentals, hotels and restaurants are often associated with high taxes.
But there are some new twists, and it's getting harder than ever to avoid paying up. According to recent research by Joseph Henchman, director of state tax projects at the Tax Foundation in Washington, D.C., local authorities in 22 states are trying to wrench more hotel occupancy rates out of online booking companies like Expedia, Priceline, Hotels.com. Court decisions have been mixed, and in many cases legal action is still pending.
Florida's going even further, levying an occupancy tax on timeshares as well as hotel rooms — a move expected to bring in $2.2 million in revenue over the next two years, according to a February report by the National Conference of State Legislatures.Slideshow: Summer has arrived
Even the great outdoors is getting pricier. New York state has added a $5 fee for out-of-staters looking to use state park campsites this year. In Maine campers at state parks will now lose $2 if they cancel their reservation. In 2009 six states — Idaho, Illinois, Iowa, Maine, New York and Washington — raised the cost of their hunting and/or fishing licenses, according to the NCSL.
In some cases, like Illinois’ $2 (15 percent) hike on fishing licenses, the fee increases have been in the making for several years. Nonetheless, they often affect sportsmen (and women) who travel out-of-state to hunt, fish and camp. And they’re targeted to specific groups — making them palatable to the general public — says Stacy Mazer, a staff associate at the National Association of State Budget Officers.Slideshow: Cartoons: Summer getaways
Locals can be affected, too, says Henchman. Case in point: Maine, Massachusetts and New Hampshire all raised the tax on prepared food — which means everything from fast food to high-end restaurants — according to the 2009 State Tax Actions report by the National Conference of State Legislatures.
Flying? Be prepared to open your wallet. AMR's American Airlines, Continental and Delta Airlines are raising their luggage fees (at Continental, for example, the first checked bag now costs $25.) It isn't all the airlines fault. Financially strapped, they are, in part, passing on the pinch from Uncle Sam, including a 7.5 percent ticket tax, a $2.50 per ticket “9/11 fee” to pay for transportation security and a $3.70 segment tax. A spokesman for the Air Transport Association of America, an industry group, says carriers are worried about a proposed hike in the fees to increase airport safety and capacity.
A movement on Capitol Hill this summer to keep car rental tax rates from rising further would seem to offer some hope for vacationers. A coalition including the NBTA, car rental companies, Ford, General Motors and the United Auto Workers is pushing a bill to end “discriminatory state taxes” for auto renters. The group complains that the taxes often finance non-travel related projects, like sports stadiums, and that they often affect locals as well as tourists.
Don't expect much to come of it. State and local government officials contend the legislation pre-empts their revenue raising authority. “It is arguable that the worst recession since the Great Depression," Timothy Firestine, the chief administrative officer of Montgomery County, Md., told a congressional panel in June, "is not the time for Congress to limit any local or state tax receipts.” Staycation anyone?
Forbes.com's Brian Wingfield contributed to this report.
© 2012 Forbes.com