This commentary appears in
Forbes.com - October 2007

Having Their Tax And Eating It Too
Sean Busking, Executive Director, ACRA

The car rental industry--and, more importantly, its consumers--has long been targeted by politicians following the "public funding" path of least resistance in the form of discriminatory car rental excise taxes.

We in the industry already know car rental excise taxes are bad policy for a number of reasons, but we have a new one to add to that list. While this "taxation without representation" is an undue burden on the unsuspecting visitor to a city, apparently the federal government is agreeable to a new form of entitlement at our consumers' expense.

In the Oct. 1, 2007, edition of Forbes magazine, an article headlined "Lifting A Loser" articulates how the Arizona Cardinals, now playing in a new stadium built with the help of funds collected via a 3.25% surtax on all car rental charges, have increased in value over 13% ($102 million) in the past year.

How, you ask? Easy. The team only pays $250,000 in rent and has shown a 20% improvement in revenue because of the skybox rentals the new stadium has generated. This is a vast improvement in operating expenses and a windfall of new revenue, all thanks to the new stadium and its corresponding lease terms.

It's bad enough that the 3.25% surtax still exists, but why should the owner of the Arizona Cardinals be entitled to a $102 million increase in value of his franchise at the expense of our consumers, the majority of which are out-of-town guests having been unfairly burdened with picking up the tab? Were our customers afforded any goods and services by the Cardinals in return for their forced contribution?

More importantly, with a plethora of stadiums built and being built by car rental industry consumers, why is this money not being diverted into tourism promotion? This would not only benefit the nationwide economy but would make the U.S. more competitive as a destination in fighting for the overall tourism dollars spent worldwide.

The concept of taxing a visitor is not new. Many years ago, bed taxes were started to fund Convention and Visitors Bureaus' efforts to bring more tourism and conventions to the city. These taxes on visitors directly funded these efforts. In other words, the money collected was directly put back into the efforts to bring more people back to that same city.

Now the car rental industry is apparently "charged" with collecting surcharges and taxes nationwide to fund athletic stadiums all over this great nation in order to help a city keep a team from moving. While the concept alone should be challenged, since a very small percentage of car renters use these facilities, now it is apparent the owners of the sports franchises (not the cities themselves) are the real breadwinners.

It is an interesting concept that city commissioners are taxing their visitors to make one of their constituents very wealthy. This is just wrong. As the article suggests, Cardinals owner Bill Bidwell has received a massive increase in the value of his team at the expense of the consumers. I would suggest Bidwell should be entitled to an increase in value if his team performed, not by taxing unsuspecting visitors.

We would suggest if this type of tax is deemed acceptable to the American public, then maybe Bidwell should make a corresponding $102 million investment in road improvements, money for schools and education, feed the homeless, promote tourism ... in turn bringing more visitors back to Phoenix, or any one of a hundred other projects the citizens of Arizona need. He should not be entitled to personally reap the benefits.

The concept of "taxation without representation" developed in America's revolution back in the 1700s to get us out from under British rule. Ironically, the New England Patriots play in a stadium built in 2002 with no taxpayer funding, yet the team performs exceptionally well, and its value goes up accordingly. With that in mind, we would suggest that perhaps the citizens of Arizona should have let this cardinal "fly the coop." All the Bidwell family did was take $102 million from unsuspecting visitors, yet no benefit is flowing to these individuals. What a travesty.

Sean Busking is executive director of the American Car Rental Association.
 

Value Statement
Dick Radzis,
President ACE Rent A Car, President ACRA

I, like all others, try to be a responsible leader in my own company and as such I work hard to understand all the influences that impact it. As an operator in Illinois I saw first hand the devastation that Renter Responsibility Laws of the 90's had on the industry. Fortunately, I also saw how an industry could come together and fix bad legislation. Today, I see another nationwide movement of bad taxation policies that are taxing car rental customers for unrelated benefits.

I have chosen to be involved in ACRA to assist in the support of sensible legislation and taxation policies. Being involved takes time, but I see that time as an investment in the future well being of this industry. ACRA will create the platform that allows the viewpoint and position of our members to be heard. None of us can do this alone, I believe, as Benjamin Franklin said "we must hang together or....else, we shall most assuredly hang separately".

I feel our industry becomes complex when you consider the tax issues, insurance legislation and governmental regulations that are placed upon us. To understand that complexity I need a source of information that keeps me current on legislation, issues and trends. The more we all know, the better prepared we will be.

ACRA Files Amicus Briefing in
Florida VIcarious Liability Case

ACRA and its industry allies are opposing efforts by trial attorneys in Florida to re-define the federal law that repeals vicarious liability in all 50 states.  ACRA is joined by TRALA and Industry Council members Dollar Thrifty Automotive Group in filing an amicus brief in the Poole v. Enterprise case currently pending before the circuit court in Brevard County, Florida.  The court is expected to hear arguments in the case next week.

The brief supports the position of Enterprise Leasing Company of Orlando that Florida's law setting caps on the vicarious liability of short-term lessors is not a financial responsibility law protected by the federal statute.  Instead, the brief argues that the caps are vicarious liability laws and are clearly preempted by the federal law known as the Graves Amendment.  The brief also supports Congress' authority under the Constitution to enact legislation creating a national standard against holding non-negligent owners of rented and leased vehicles liable for the actions of their customers operating the vehicles.  The vast majority of courts nationwide, including courts in Florida, have upheld the broad authority the Graves Amendment.

For more information please contact ACRA's Sean Busking at This email address is being protected from spam bots, you need Javascript enabled to view it
or at 918-810-6231.

Read Sean Busking's
Editorial in AutoRentalNews

What if all of the industry players were members of ACRA? Everyone would then get representation on an issue. As to the stickier funding debate, the answer is simple: ACRA's pro-rata membership dues are used for this very reason, as an industry legislative action pool. This becomes the primary source of funding for everyone. Click for entire Editorial