One of our frequent AutoSlash users reached out to the Fee Detective about some previous car rentals in Las Vegas, unsure about the computations of taxes and fees. We get questions as to whether the various taxes are included in the AutoSlash rate frequently (they are). In this case, the reader even included spreadsheets, questioning whether the computations and practices were legal! As a result, we were happy to take a walk through an average billing statement in Las Vegas.
Rental Car Bills aren’t Designed to be Easily Understood
But first, a step back into not-so-distant history. There have indeed been class action settlements related to non-disclosed fees at Las Vegas McCarran Airport but all the fees imposed today have been vetted. In fact, four of the six fees we see today on Las Vegas rentals are direct taxes, while a fifth is an indirect tax! When a rental has five different payments going to government agencies, you can be certain the bill’s going to be hard to understand!
Our Reader’s Questions
Our reader had multiple questions embedded in the spreadsheet calculations:
- If there’s a discount in the base rate, why doesn’t the total rate decrease by the same percentage?
- Are the fees and taxes on a Las Vegas McCarran Airport rental legitimate?
- How are the various fees and taxes computed in practice?
When a 20% Discount doesn’t Cut the Total Rate by 20%
Ever see a coupon that promises an “up to 20% discount”? The discount – anywhere from 0 to 20% -- would be applied to the base rate of the rental. The discount to the base rate would also decrease four of the five taxes on a Las Vegas rental. However, one fee charged by the rental car company and one tax charged by the airport authority are per day amounts and never discounted. Even when there’s an award rental day (100% discount) on a rental, there’s still a payment due. The total rate will never be $0, so a percentage decrease in the base rate always has a lessened (percentage-wise) impact on the total rate.
As National shows, a free day is not free and a 20% coupon code is more frequently 18% of the total cost.
Are those Vegas Airport Rental Fees and Taxes Legitimate?
The AutoSlash team does like Las Vegas but we’re not fans of renting cars there unless we’re planning an outing away from our resort. On our last visit, we had a rental car for a single day and used ride-sharing services the rest of the time.
Why? In a nutshell, Las Vegas is extremely proficient in gouging consumers. While the city is not the worst example of rental car taxation, it’s certainly not friendly for a car renter. Breaking down a receipt in Las Vegas, there’s one legitimate fee, one completely bogus fee, one indirect tax, and four direct taxes! Of course, the tax authorities only call one of the taxes a “tax”, as it’s challenging to justify a receipt that lists five taxes.
Completely Legitimate Fee
- Base Rate – The base rate is the cost of the car charged by the rental car company and the “pre-tax” amount seen on other websites. This amount goes to the rental car company and keeps them in business.
Entirely Contrived Fee
- Vehicle Licensing Fee – This is a made-up fee the rental car companies with government endorsement. A renter might ask, “isn’t putting license plates on the car part of the business of renting cars?” It is, but the rental car companies get to charge a few dollars per day to recover their cost of doing so. Does it cost $2 per day (more than $700 per year) to put plates on a car? No, but the government regulators allow it anyway. This fee also allows the company to get some (modest) revenue on award days.
- Concession Recovery Fee – The concession recovery fee is an indirect tax. Put bluntly, it’s the airport’s cut based upon the precise total of your rental. McCarran Airport requires 1/11th of any revenue that’s due to rental operations for any rental. Any gross revenue that goes to the rental car company – the car, made-up fees, insurance, car seats, even fuel – is then going to be subjected to this fee that represents the airport’s cut of each rental. These fees (which are then taxed) is one of the reasons it’s a bad idea to add unnecessary products and services to your rental. This money goes directly to the Clark County Department of Aviation.
- Customer Facility Charge –The Customer Facility Charge is a daily tax for access to the airport’s facilities and rental car terminal. Yes, the airport knows that there’s the same stress on infrastructure from a renter whether a trip is one day or two weeks. You leave the airport with a car and then come back when it’s time to go home. However, the long-term renters are charged for each day away from the airport as part of this daily tax. This money goes directly to the Clark County Department of Aviation.
- Government Services Fee (10%) – It’s called a fee but is a tax, with the funds going directly to the Nevada Department of Taxation.
- Clark County Car Rental Fee (2%) – It’s called a fee but is a tax, with the funds going directly to the Nevada Department of Taxation. This amount tends to get buried in other line items and often leads to confusion.
- Sales Tax (8.15%) – In a shocking example of transparency, the State of Nevada uses the word “tax” when describing the sales tax. Again, these funds go directly to the Nevada Department of Taxation.
Q & A Time
Question: Was there ever a time when the cost of a rental car was effectively the base rate plus sales tax?
Answer: Yes, and that was within the past two decades. Abusing airport consumers is a comparatively new concept in the industry.
Question: The longer I rent a car, the more I pay for the airport and rental car facility?
Answer: Yep. It’s annoying to be charged for every day a facility is not used. The concept really required the intervention of a creative bureaucrat but is not isolated to Las Vegas.
Question: How many taxes can the Clark County Department of Aviation and the Nevada Department of Taxation make up?
Answer: We don’t yet know the answer to that question and don’t want to tempt fate. We’ll accept “more than five” as an answer.
Question: Is Las Vegas making tourists pay for their airport?
Answer: No, Las Vegas makes tourists pay for much more than the airport.
Question: What do Nevada residents call tourists?
This is the state income tax form for Nevada residents (0% rate). When visiting Las Vegas, you’re literally paying the residents’ share of taxes via rental cars, hotels, shows, etc.Computing the Taxes on a Rental
Now that we know the rental in Las Vegas is subjected to (at least) six different forms of surcharges (five of them taxes), it would be nice to know that these were computed in a straightforward manner. However, a straightforward manner doesn’t maximize the government’s revenue. There are three cases where indirect taxes are taxed*, which is one reason receipts are a little ambiguous …
* We’re thankful the U.S. Congress and IRS haven’t figured out this structure.
The rental car companies always get to keep the base rate for the rental along with the vehicle licensing fee. We’ll call this rental car company revenue.
Taxes Based upon Rental Car Revenue
The Concession Recovery Fee is 10% of the Rental Car Company Revenue. That amount goes directly to the Clark County Department of Aviation.
Taxes Not Based upon Revenue
The Customer Facility Charge of approximately $4 per day goes directly to the Clark County Department of Aviation. Even on free award days, this tax is still due.
Taxes Based upon Already Taxed Totals
The three taxes below all are paid directly to the Nevada Department of Taxation. Of course, these taxes could be combined into a single 20.15% “Rental Car Tax” with 1/3rd the paperwork. However, tourists are far more likely to notice – and complain about – a 20.15% tax than an alternative structure of 10% + 8.15% + 2% on the same total.
The Government Services Fee is 10%, the Sales Tax is 8.15%, and the Clark County Car Rental Fee is 2% of the Rental Car Company Revenue plus the Concession Recovery Fee.
The Clark County Car Rental Fee shows up in quotes and receipts in a variety of ways. It may be individually listed as the Clark County Fee or, in the case of Payless, Other Fees. A few rental car companies combine the Clark County Car Rental Fee (2%) and Sales Tax (8.15%) as a single line item. When a rental car company combines these taxes, the total should be just slightly more than the 10% Government Services Fee, as the Avis example below shows.
This Avis example shows the six “normal” fees in action, with the combined Clark County Fee and Sales Tax figure.
These calculations are not pretty or straightforward for the consumer but the rental car companies are acutely aware that the five taxes must be computed accurately. Overcharge consumers and there will be a(nother) class action lawsuit; undercharge consumers and face collection actions by the Clark County Department of Aviation and the Nevada Department of Taxation.
Renting a car in Las Vegas? The airport and state will make sure you’re paying for infrastructure and government services well before you arrive at the resort and get confronted by “resort” fees, recently implemented parking fees, and (of course) hotel taxes! While we can’t get rid of the various taxes and fees dumped on rental cars from Las Vegas McCarran International Airport, we can always help you get the lowest possible rate on your upcoming rental. Click here to request a quote now!
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.