Wednesday, June 25, 2008

Update on Rental Car Taxes

Sara Nassauer has written a very informative article for the Wall Street Journal about the current state of carsharing and rental car taxes.

Currently, carsharing customers are paying the state or local jurisdictions' rental car taxes in Washington state, Pittsburgh, Pa., Chicago, Ill., Boston, Mass., New York, New Jersey and Philadelphia, Pa. These car rental taxes are in addition to sales taxes.

Nassauer reports, "In 2006, Chicago exempted car sharing from the city’s car-rental tax on hourly rentals but not daily rentals. Boston allows Zipcar to charge members a flat annual “convention center tax” of $10, instead of the $10 per rental it charges customers of traditional rental-car companies..."

Even with Enterprise in the carsharing business, the article suggests that rental car companies may be using carsharing as leverage in their efforts to get the taxes lowered or removed. The article mentions efforts to straighten out the car rental tax mess in Chicago and Washington state and the possibility of imposing the tax on Colorado's two non-profit carshares.

Rental car taxes typically are used to fund convention and visitor services. Carsharing companies argue that since their members are local and not the prime users of these facilities they should be exempt. (In one case I'm familiar with, here in Portland, rentals to local residents are already exempt but rental car companies seem to continue to charge the tax anyway.)

So, word to the wise: if your car rental tax is levied locally, get to work right now and get carsharing defined and exempted from the tax. We shouldn't be taxing the things we want to promote!