We all know the aphorism that the only certainties in life are death and taxes. Consumers deal with the constant burden of taxes on every vehicle rental, even on award days. Some governments are more creative than others when it comes to generating new taxes. The master class in creative taxation takes the Fee Detective to Chicago, Illinois!
One who suggests the City of Chicago adores taxes would be a specialist in profound understatement. AutoSlash struggles to help renters at Chicagoland airports find great rates; one tax alone is $8 per day for all rental cars. Chicago's just about the only city where AutoSlash can currently make a paid reservation where the burden from "Fees and Taxes" ($14.74) is more than twice the cost of the car itself ($7, after a $5 per-day coupon) for a weekend rental.
What's currently newsworthy about Chicago taxing rental cars?
One of Chicago's taxes was recently deemed to violate the Illinois Constitution! Yet the determination that this tax was illegal still won't decrease the tax burden on any Chicago car rental … Confused? Well, Chicago had gotten really creative!
The city had successfully expanded the tax base by assessing a 9% tax on rental car transactions outside of Chicago. Fortunately for consumers in the Chicago area, Enterprise and Hertz joined forces to sue the City over this extra-territorial tax.
The City of Chicago's reasoning? Here's the Cliff Notes version for non-lawyers:
If a renter entered a contract for a car outside of Chicago and was also returning the car outside of Chicago, the car was clearly intended for use in Chicago, therefore we're making the non-Chicago businesses charge a 9% Chicago tax (in addition to any taxes charged by the city where the rental actually takes place).
You've got questions. We've got answers. (And we're easier to find than a RadioShack.)
Did a legislative body decide this was a good idea? Yes, the City of Chicago intentionally implemented (and defended) this revenue measure.
Did an appellate court judge decide that this plan seemed legal and logical? Yes; that's how the case got to the Illinois Supreme Court.
Why did the City of Chicago continue the fight? The city saw approximately 21 million reasons (annually) for defending the unconstitutional tax.
This tax on suburban Chicago rentals is no more - and that's a good start - but we still see a proliferation of taxes and fees that are poorly construed and applied. Even today, we're seeing a similar situation off the premises of the Denver International Airport, where Avis, Budget, and Hertz locations within 20 miles of the airport are charging airport fees on all rentals, even for those renters who are never going to enter the airport grounds.
Fees, facility charges, and taxes got you confused and/or down? The Fee Detective can explain. Send your query to firstname.lastname@example.org and we may feature your question in an upcoming post.