Beware: The hidden cost of renting cars

The base price of a car rental tells only a part of the story to your wallet. Renters have to add to that initial base cost, extras such as insurance (if your credit cards do not cover you) and sales tax, which differs by state and sometimes within different cities in those states, too. There are also those extra taxes that renters are unaware of until they sign on the dotted line. These taxes have become more and more popular in the last decade and even more disconcerting: in some cases they can more than double the cost of your rental car.

Find out which cities are the worst culprits below and why. 

Car rental taxes by city

To level the playing field, we choose an economy-sized car for a week's rental on a Wednesday in May (the tax percentages would be the same for whatever company you chose); the following prices (listed in the chart at right) were found at airport rental locations in the U.S.' 10 largest cities by population.

What is evident is that the highest markups are all in cities that are building, renovating or expanding sports stadiums. (Texas loves its sports!) Right now, Houston is charging a "Harris sports venue tax," Phoenix a "stadium surcharge," San Antonio a "Bexar sports venue tax" and Dallas a "Euless sports venue tax." Detroit, with the smallest markup, also has a sports tax, but it also charges very few other taxes.

Among these 10 cities, other additional taxes included a "customer facility charge," "tourism fee," "auto renting occupation tax," "lessor tax," "busing recovery fee," "concession recoup fee" and "customer transportation charge." If all that is not enough to result in acute sticker shock, car-rental companies beneath these tax lists often also post caveat emptors along the lines of "Additional surcharges, local taxes, etc., may apply."

The dispute

Politicians feel they are on firm ground when they tax outsiders, not their voters, and argue that increased taxes do not hurt tourism. Two destinations voting on charging or continuing these fees in 2012 include San Mateo, Calif. and Kenner, La., which contains Louis Armstrong New Orleans International Airport. But according to Auto Rental News, a backlash has started against these kneejerk taxes. In Washington, D.C., at the moment is the "End Discriminatory State Taxes for Automobile Renters Act of 2011," (H.R. 2469; a similar bill in 2009 went to the political graveyard), which has the support of the Global Business Travel Association and National Consumers League.

Last year, when H.R. 2468 was first touted, Journalist Christopher Elliott explained some of the thinking behind these taxes and the efforts to quash them, noting that even if passed it would only stop new taxes, not cancel existing ones. Zach Castle of the Tax Foundation weighed in, too, and also listed those cities in 2011 with the lowest and highest discriminatory travel-tax rates.

What can you do?

How can customers get around these fees? Well, pretty much it cannot be done. The solution is to lower your base price. The tax percentage does not change, but 33% on $200 is less than it is on $400. Consider renting at a downtown office, not an airport one (cities often charge airport facility fees) and search for the lowest fees at comparison websites such as Expedia and newbie Zopica. Another great tactic is to always book the cheapest car and then at the counter ask for an upgrade. IndepedentTraveler.com also offers advice on lowering costs.

Also be aware that some car-rental agencies charge a fee if the car is rented using frequent flyer miles. Yes, yet one more fee!

For all of this, you can blame West Virginia, which was the first state to impose any form of sales tax on car rentals, in 1921. But peeved readers are encouraged to contact their representatives and senators to voice their concerns.