Charleston County backs rental fee for incentives

Thursday, 06 May 2010
By Ashley Fletcher Frampton

CHARLESTON -- Charleston County Council voted 8-1 Tuesday in favor of a new 5% tax on rental car receipts in the county. The tax would create a fund for expansion of air service, including the luring of low-cost air carriers to Charleston International Airport.

Tuesday’s vote was the first of three required for the tax to become law. The council also will hold a public hearing on the measure at 6:30 p.m. on May 20.

Area business and tourism groups are backing the 5% rental car tax, citing the region’s lack of competitiveness since low-cost carrier AirTran Airways pulled out of Charleston in December.

Several officials with those groups, which include the Charleston Area Convention and Visitors Bureau, the Charleston Metro Chamber of Commerce, the Charleston County Aviation Authority and the Charleston Regional Development Alliance, attended Tuesday’s meeting wearing red stickers that said “Let’s Fly.”

None of those officials spoke at the meeting.

But five local representatives of rental car companies spoke during the public comment period, telling council members they should oppose the tax because it would affect residents more than tourists.

Echoing a statistic that most rental car representatives quoted, Kristen Olson, group rental manager for Enterprise Holdings, said that, among the company’s dozen or so locations in the Charleston area, 80% of rentals are to people whose cars are being repaired.

Often those rentals are at the expense of insurance companies.

Councilman Elliott Summey largely dismissed the comment, noting that people pay insurance premiums to cover rental cars when needed.

Council Chairman Teddie Pryor asked Olson why, if the new tax would be such a problem to residents, none showed up to protest.

“I don’t see one person who’s a taxpaying citizen against this” except for rental car companies, Pryor said.

The 5% fee on gross receipts of passenger vehicles rented in Charleston County would generate about $1.5 million annually, according to Helen Hill, executive director of the Charleston Area Convention and Visitors Bureau.

Hill has said low-cost carriers nowadays are looking for financial support from a community before committing to serve an airport.

She has said the $1.5 million would not be an ongoing subsidy but rather would be used to offset an airline’s startup costs.

In a letter Hill sent to council members last week, she wrote that one carrier “has told us that as soon as an incentive package is available, it will move forward on offering service to Charleston.”

Local officials have not identified that airline. But state lawmakers, who are considering a larger incentive fund for air service, have said that Southwest Airlines is interested in starting service at the Charleston and Greenville-Spartanburg airports.

The legislation under consideration at the Statehouse would make up to $15 million available for airlines. Midlands lawmakers have blocked that bill because they feel Columbia Metropolitan Airport will suffer if Southwest starts service from Charleston and Greenville-Spartanburg.

This week lawmakers said a compromise deal is in the works.

“I hope we’ll be able to hear a great announcement very soon,” Councilwoman Colleen Condon said Tuesday after the council’s vote.

Last week, Summey said the local incentive fund on its own, without state dollars, would not be enough to lure the airline considering Charleston.

Councilman Dickie Schweers was the only council member to vote against the 5% tax Tuesday.

“I just really struggle with a 30%-plus tax on anything,” Schweers said.

Schweers was referring to an estimate of the total percentage of taxes and fees charged on cars rented from the airport.

Because some charges are taxes and some are flat fees, the actual total percentage depends on the cost of vehicle rented.

An online quote for a midsized sedan rented at Charleston International Airport shows a base price of $46.98. After taxes and fees, the total is $61.64. In that scenario, taxes and fees total about 30% of the cost.

That does not factor in the proposed 5% tax for airline incentives. It includes a 10%concession recovery fee, a $3.50-per-day customer facility charge, sales tax and a rental car tax.

The same size sedan, rented from the same company at a non-airport location in Charleston, has a base cost of $30.99, and $34.86 after adding existing taxes and fees. In that scenario, tax and fees add up to 11%.

The airport’s concession recovery fee and customer facility charge do not apply.

Councilman Henry Darby called the tax measure “corporate welfare” for companies that make billions of dollars. But he voted for it.