[S]OUTH BURLINGTON — The city of South Burlington is considering adding an up to 5 percent tax on rental cars to pay for paving and repairing roads in the city.
The rental car tax would be charged on all cars rented at the Burlington International Airport and the city’s other rental car agencies. Both the city’s voters and the Vermont Legislature would have to approve the implementation of the tax since it would be a change to the city charter.
The city would collect and administer the tax, which covers all cars rented for less than six months.
Gene Richards, the airport’s director of aviation, said that he learned about the proposal from VTDigger so was not aware of details but thought it sounded aggressive.
“It sounds very aggressive for the traveling public to be taxed up to 5 percent more, and for an industry that gives so much to our state, I think we should be careful to those people who are giving our livelihoods to us,” he said.
The state currently collects a 9 percent tax on rental cars, and the airport collects a $4 facility charge per day on cars rented at the airport.
Half of the money the airport receives covers the industry’s usage of airport facilities; the other half is given back to the car rental industry in a way that benefits consumers. For example, the airport is using a portion of that money to build a car wash, Richards said.
South Burlington city manager Kevin Dorn said that while the state and the city of Burlington benefit from taxes on rental cars, the cars use South Burlington’s streets and the city has the responsibility of responding to accidents on those streets.
“These taxes already exist to benefit other levels of government, but the impact is felt in South Burlington as we try to respond to accidents or repair our roads,” he said. “It follows that the city of South Burlington, above all others, should at least be getting some revenue from them in service to repair our infrastructure.”
Dorn said at Monday’s City Council meeting the idea came from driving on Airport Parkway and seeing the condition of the road. The airport pays taxes that go toward road maintenance, but rental car companies do not.
The city is still calculating how much revenue the rental car tax would bring in, Dorn said.
Councilor Dave Kaufman said that he understands that the city would benefit from the tax, but he thinks it would be a battle with the Legislature to get it approved.
“You get to the Legislature, and they’re going to say, we need money for what we want to do and we’re not going to give the communities the ability to take that money,” he said.
Dorn said the rental car tax would not affect the city of Burlington. Although the city owns the airport property, Dorn said that commercial businesses inside the airport pay their local option rooms and meals taxes to South Burlington, and this would be similar.
Olivia Lavecchia, a spokesperson for Burlington Mayor Miro Weinberger, said Burlington was looking into the proposal.
The City Council is also considering asking voters to support a 1 percent increase to the local option tax on sales, rooms, meals and alcoholic beverages to pay for a new indoor recreation facility and a creative arts center.
“Since we’re potentially going for a charter change for the local option tax, we felt it timely to do the short-term car rental tax as well,” Dorn said.
Under the local option tax, the municipality receives 70 percent of the revenue, and can use it how it wants. The state receives 30 percent of the revenue, which it uses to reimburse municipalities for state-owned buildings in their town and cover the program’s administrative costs.
Thirteen municipalities in the state have a 1 percent local option sales tax. South Burlington would be the first municipality to increase it to 2 percent.
Along with the performing arts center and the indoor recreation facility, South Burlington is also considering building a pedestrian and bicycle bridge over I-89. These projects are still in their planning stages, and would need voter support to move forward.
The City Council will continue its discussion about both the new rental car tax and the increase in the local option tax at its meeting Jan. 22.
