An ordinance proposed in Multnomah County Oregon, which comprises the city of Portland, would drastically increase the Motor Vehicle Rental Tax from 12.5 percent to 17 percent, making it one of the highest in the country.
The Multnomah County Board of Commissioners is currently grappling with a $42 million overspending problem.  While the tax hike is estimated to raise a meager $4.7 million, it will likely result in less revenue due to a decline in car rental demand and a larger economic hit on local businesses, residents, and tourists.
Policymakers are increasingly looking at rental cars for higher taxes to try to export their tax burden to those who cannot vote or hold these lawmakers accountable.  What they often ignore is that the majority of car rentals are actually made by local residents and businesses.  Rental car tax hikes have large effects on the economy – especially at the local and county level.  One study shows that a recent localized tax hike led to a 9% reduction in car rentals and up to an 86% reduction in the number of days people rented cars. Residents and businesses simply rented from a surrounding county with a lower tax rate.
Additionally, car rental demand or the length of rentals often declines as tourists opt to walk or use other forms of transportation in downtown areas.  Even when visitors decide to rent a car, they compensate for increased travel costs by spending less on meals, hotels, and other activities.
Click here for ATR’s recent letter to the Multnomah County Oregon Board of Commissioners.