Where to Enjoy the Least Taxing Vacations

Call it the happiness tax. Even when you go on vacation, the government is going to make you pay for your pleasure.

The latest version of an annual survey by the National Business Travel Association (NBTA) has just been released, and it lists the cities that charge both vacationers and business travelers the most in taxes for items like meals, hotels, and car rentals.

The five cities with the least tax burden are…

  • Fort Lauderdale, FL
  • Fort Myers, FL
  • Portland, OR
  • Detroit, MI
  • Honolulu, HI

Those are the same five cities from last year’s survey, just with their order tweaked. And the worst?

  • Chicago, IL
  • New York, NY
  • Boston, MA
  • Seattle, WA
  • Minneapolis, MN

The big surprise was New York City, which didn’t even make last year’s Top 5 but comes in at No. 2 this year. Dropping off the 2010 list was Dallas.

The NTBA especially loathes what it calls “discriminatory travel taxes” – fees charged to travelers for items that have nothing to do with travel. Sports arenas, for instance, are often built with taxes on travelers because they can’t vote against the politicians who want to build their pet projects.

“It is unacceptable that visitors, whose general tax dollars can help to keep a community afloat in difficult economic times, are forced to pay so much more taxes and fees to fund projects unrelated to the services they purchase,” says NBTA Executive Director Michael W. McCormick. “On average, the fees targeting travel services increase the tax burden by more than half, and in the worst cases, by up to 144 percent.”

It’s no surprise that local governments are hiking taxes on travelers during a recession. But that could come back to hurt them later.

“Tax rates increased and more were implemented across the United States to make up for government revenue shortfalls during the recession,” Fay Beauchine, NBTA’s Foundation chair, said after last year’s survey. “So when the economy recovers, travelers will take a double hit of rising prices and exploding taxes due to tax rate increases enacted during this downturn.”

And that could entice business travelers and vacationers to look elsewhere when booking their trips.

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