Local Governments Imposing Punitive Taxes on Car Sharing

June 23, 2008

With governments at all levels exhorting citizens to be more efficient in their gasoline usage, it seems surprising that local governments are slapping car sharing services (such as Zipcar) with punitive taxes.

An article in last week’s Wall Street Journal looks at the trend, which usually takes the form of imposing a fixed tax on both rental car companies and car sharing services if a car is rented for any part of a day. In Pittsburgh, for instance, users pay a flat $2 tax whether they rent from Enterprise for a day, or from Zipcar for an hour. Since Zipcar’s rates average $9 an hour, it’s a hefty tax burden.

Rental car companies probably don’t mind seeing their newest competition squirm a bit. And legislators are in no hurry to change things:

The county executive’s office says it is drafting an amendment that would exempt car sharing from the tax, but doesn’t believe it will come up for a vote in the county council “anytime soon.”[…]

“Our position has been this is wrong for everybody,” says Laura Bryant, spokesperson for Enterprise Rent-A-Car, National and Alamo and the Coalition Against Discriminatory Car Rental Excise Taxes. She says there is no difference between car rental and car sharing. “It would be pretty dumb to say ‘If you rent for two hours no tax and for eight hours you are taxed,’ ” she says. Enterprise actively objected to exemption legislation in Illinois and Washington. The company has argued that giving Zipcar members a tax break puts Enterprise at a competitive disadvantage, especially in urban areas.

Of course, it’s more than a coincidence that these taxes might kill off their competition. The best solution is probably an equitable tax, such as per-hour or on membership fees.

Read the entire article here.

Read a previous blog we did on this issue here.


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