Seattle Skyline

The AutoSlash team is fond of Seattle. The region has a beautiful mixture of climate, nature to explore, and fantastic hotels and eateries. The ascendance of the Seattle sound (grunge) was during our high school and college days for the older AutoSlash team members! Prefer hip-hop instead? The landmarks in Sir Mix-A-Lot's Posse on Broadway are all in Seattle. There's even the Boeing Museum of Flight to satisfy the needs of transportation geeks. What else does Seattle (and the State of Washington) have? Taxes on rental cars that shift the payment of government services from the users of those services to rental car customers.

Sir Mix-A-Lot had more than one song.

In addition to the normal taxes seen at effectively all airports in the United States -- Concession Recovery Fees, Customer Facility Charges, Sales Taxes, and Vehicle Licensing Fees -- renters in Seattle will see a vaguely named Rental Car Tax. While the name is vague, the purpose is not. The Rental Car Tax is a big deal for the Washington State Department of Revenue. The Rental Car Tax actually has three different components and may be listed as a single line item or broken out into the three parts: 


Thrifty just collects the 7.7%


While Enterprise breaks out the three taxes for renter reference.

What exactly are visitors to Seattle (and locals who need a rental car) subsidizing? In a nutshell, other forms of transit and sports facilities (whether professional or amateur). And the Rental Car Tax isn't cheap in Seattle -- it's 7.7% on all rental company revenue and had been 9.7% percent until late 2011. 

Uses of the Rental Car Tax

The bulk of the 7.7% Rental Car Tax (5.9%) goes directly to the State of Washington. This State tax portion goes directly into the "multimodal transportation account". What's that you ask? A program that's designed for transportation solutions other than personal or rental automobiles. Here's the enacting legislation:

There is significant state interest in assuring that viable multimodal transportation programs are available throughout the state. The legislature recognizes the need to create a mechanism to fund multimodal transportation programs and projects. The legislature further recognizes the complexities associated with current funding mechanisms and seeks to create a process that would allow for all transportation programs and projects to compete for limited resources.

We've seen this story before. When a government is looking for a "mechanism to fund" a project, the first step is to ostensibly tax visitors. Taxing visitors is more politically expedient than directly taxing locals, despite research showing most rental car transactions are made by local residents. Anyone renting a car in Seattle helps pay for projects such as Park-and-Ride sites and Rapid Transit programs like RapidRide for Washington residents! More on those Rapid Transit programs in just a bit, right after King County takes their pound of flesh percent of cash ...

The next 1% of the Rental Car Tax is the County's cut of the tax. Each county in the State of Washington has the right to collect this 1% tax but (remarkably) only 5 of 39 counties elect to take these funds. Of course, King County is happy to take the optional 1%. The proceeds of this tax can only be allocated to sports, specifically:

Construction or operating public sports stadiums or youth or amateur sports activities or facilities. 

King County previously had an additional 2% tax on rental cars to help pay for Safeco Field. That tax authority fortunately expired in 2011, when the bonds for the stadium were paid off in full. 

The remaining 0.8% of the current Rental Car Tax? That's explicitly for the Regional Transit Authority (RTA) to "finance a high capacity, rapid transit system". Sound a little redundant given the funds that already went to the multimodal transportation account to support (among other initiatives) rapid transit? What can we say? The State of Washington is truly dedicated to making rental car users and owners of cars pay for the transportation needs of other commuters! 

Fees, facility charges, and taxes got you confused and/or down? The Fee Detective can explain. Send your query to feedetective@autoslash.com and we may feature your question in an upcoming post.

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