This Is One Leaky Tax

In my haste to criticize Gwinnett County’s adoption of a vehicle rental tax to help fund its new Triple-A baseball stadium, I did not properly interpret the proposal. Fortunately, a reader pointed out my mistake, because it turns out that I was giving the county too much credit.

The 3% tax does not apply to all rentals in Gwinnett County: it applies to rentals in unincorporated localities of the county. What is the difference? The difference is that 20% of Gwinnett’s population live in incorporated areas.

Here is a population breakdown of the Gwinett’s 15 incorporated localities.

Town Population (2006) Fun Facts
Suwanee 14,034
Sugar Hill 16,170
Snellville 19,983
Rest Haven 107
Norcross 10,111
Loganville 2,389
Lilburn 11,542 Home of Jeff Francoeur.
Lawrenceville 28,851 Larry Flynt was shot here.
Grayson 1,404
Duluth 25,838 Home of Brian McCann and Nick Green.
Dacula 4,484
Buford 10,868 Future home of the Gwinnett Braves.
Braselton 630
Berkeley Lake 2,014
Auburn 304
Total 148,729
County Pop. 757,104
% Unincorporated 19.64%

The map below highlights the incorporated areas within Gwinnett County.

Incorporated areas of Gwinnett County

While 28 total renal agencies are currently located in taxable areas, the map shows how easy it is to dodge the tax—you don’t even have to leave the county. Also, I expect many of these 28 locations to relocate to incorporated areas or neighboring counties that do not have this tax. I cannot see how this is going to raise a much revenue.

It is also amazing to see how clueless the government officials are in this whole affair. Thanks to another reader for sending me this article from the Gwinnett Daily Post.

“It takes the burden off the local taxpayers,” Commissioner Bert Nasuti said of the car rental tax, which is also in place in Atlanta to fund improvements made to Philips Arena in the late 1990s. “The reason you do that is so you don’t raise taxes.

“There’s almost no place in the universe that doesn’t have a rental tax,” he added, referring to large cities. “It’s been a part of the finance plan all along.”

Nasuti said he views the car rental tax as similar to the hotel-motel tax, which is charged mostly to tourists and goes to pay back the bonds used to build the Arena at Gwinnett Center.

How is this not a tax increase on Gwinnett residents? It is rare that anyone other than a Gwinnett resident would rent a car from this area, especially after adding a tax. But that is not how Gwinnett officials have been thinking about this.

Lisa Anders of the Gwinnett Convention and Visitors Bureau said the county would still remain competitive with Atlanta for rentals.

In addition to the 3 percent tax for those who rent cars at Hartsfield-Jackson International Airport, another 10 percent surcharge is added to pay for a planned car rental agency location, she said.

“There are a lot more car rental places in Gwinnett than most people think,” Anders said, adding that many hotels and car dealerships have rentals as well as stand-alone facilities in the Duluth area.

Ms. Anders belief that rental prices in Gwinnett will be competitive with the fees at the airport completely misses the point: people who don’t have cars are not going travel from the airport to Gwinnett County—about 30 miles—to rent a car. Is the county assuming that current rental rates will stay the same and that the number of rental branches will remain at 28? I’d love to see the assumptions that the county is using to project $500,000 a year in revenue.

Introducing a car rental tax on unincorporated areas of Gwinnett County to raise revenue is like using a bucket full of holes to bail water. It is unfortunate that the deal has been done and the county is on the hook for a lot of money. It’s time for the county to figure out a better way to pay for the stadium.

2 Responses “This Is One Leaky Tax”

  1. I think what they might be banking on is the possibility of Atlanta’s 2nd major airport being put in northern Gwinnett county. That seems like the most logical place, both on population trends and land availability/price.

    Also, from what I’ve seen is that most car rental places in Gwinnett are on major highways (78, 29, etc), and are rarely in the incorporated areas. Incorporated areas mean higher land prices, which means things like car lots aren’t a very good idea.

  2. JC says:

    I don’t see a new airport coming anytime soon. I think it is a minimum of 20 years away, and there is no guarantee it would be in Gwinnett. And if the commissioners are banking on this they aren’t saying so.

    It is true that incorporated areas may have higher rental costs. But as the costs rise in the unincorporated areas we will expect those sales to fall.