[S]OUTH BURLINGTON — The City of South Burlington is considering adding a tax of up to 5% on rental cars to pay for paving and repairing city roads.
The rental car tax would be imposed on all cars rented at Burlington International Airport and other car rental agencies in the city. City voters and the Vermont Legislature would have to approve the implementation of the tax because it would be a change to the city charter.
The city would collect and administer the tax, which covers all cars leased for less than six months.
Gene Richards, the airport’s director of aviation, said he had heard of VTDigger’s proposal and was therefore unaware of the specifics, but thought it sounded aggressive.
“It seems very aggressive for the traveling public to be taxed up to 5% more, and for an industry that gives so much to our state, I think we should be careful who gives us our livelihood,” did he declare. .
The state currently collects a 9% tax on rental cars and the airport collects a facility fee of $4 per day on cars rented at the airport.
Half of the money the airport receives covers the use of airport facilities by industry; the other half is returned to the rental car industry in a way that benefits consumers. For example, the airport is using some of that money to build a car wash, Richards said.
South Burlington City Manager Kevin Dorn said that while the state and city of Burlington benefit from rental car taxes, cars take to the streets of South Burlington and the city has a responsibility to meet the accidents on these streets.
“These taxes already exist to benefit other levels of government, but the impact is being 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 earn in-service revenue to repair our infrastructure.”
Dorn said at Monday’s city council meeting that the idea came to drive on Airport Parkway and see the road conditions. The airport pays taxes which are used to maintain the roads, but not the car rental companies.
The city is still calculating the revenue the rental car tax would bring in, Dorn said.
Councilman Dave Kaufman said he understands the city would benefit from the tax, but he thinks it would be a battle with the Legislature to get it approved.
“You come to the Legislative Assembly, and they’re going to say, we need money for what we want to do and we’re not going to give 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 commercial businesses inside the airport pay their local room and meal taxes in South Burlington, which would be similar.
Olivia Lavecchia, spokeswoman for Burlington Mayor Miro Weinberger, said Burlington is considering the proposal.
The city council is also considering asking voters to support a 1% increase in the local option tax on sales, rooms, meals and liquor to pay for a new indoor recreation facility and arts center creative.
“Given that we are potentially considering a charter change for the local option tax, we felt it was also appropriate to do the short-term car rental tax,” Dorn said.
Under the local option tax, the municipality receives 70% of the revenue and can use it as it sees fit. The state receives 30% of the revenue, which it uses to reimburse municipalities for state-owned buildings in their city and to cover the administrative costs of the program.
Thirteen municipalities in the state have a 1% local option sales tax. South Burlington would be the first municipality to increase it to 2%.
In addition to the performing arts center and indoor recreation facility, South Burlington also plans to build a pedestrian and bicycle bridge over I-89. These projects are still in the planning stage and would need voter support to move forward.
City Council will continue its discussion of the new rental car tax and local option tax increase at its January 22 meeting.
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