Pittsburgh Car Rental Tax Harming Car Sharing Services

Urban-goers seeking access to a car but not requiring its use all the time are increasingly turning to car sharing services, such as Zipcar (which merged with rival Flexcar in November). Members reserve cars online for as little as 30 minutes use, and the cost of maintaining the cars is spread over many users.

Not so with the taxes, however. Local governments have often targeted rental cars for punitive taxation, as a way of exporting tax burdens to out-of-staters who usually rent cars and don’t vote in the jurisdiction. But as the Pittsburgh Post-Gazette reports, poorly worded rental car taxes are hitting car sharing services as well:

A new county tax that went into effect Jan. 1, alongside the drink tax. The car rental excise tax, passed by County Council in an 11-4 vote, is $2 per day, “or any part of a day,” for every car rented in Allegheny County.[…]

But the clause, “or any part of a day,” is a twist that can make the tax especially onerous for Zipcar customers, who may rent a car for as little as half an hour, or may even make multiple reservations in a single day. A notice posted on Flexcar’s Web site (which members can still use to make reservations during the transition to Zipcar), reads, “The tax will be $2 per reservation (plus $2 for each additional or partial day, if your reservation is longer than 24 hours).”[…]

“It seems poorly designed,” Patrick Fleenor, chief economist at the Washington, D.C.-based Tax Foundation, said of the tax. “Every time you rent the car you pay the tax.”

Given that the average Zipcar rental bill is $10, a $2 tax sounds punitive. The company points to three other cities that distinguish between car sharing and car rental:

Portland, Ore., and Chicago, has defined car sharing as different from car rental, a distinction that exempts car-sharing services from car rental excise taxes. Meanwhile, Boston recognizes the distinction by charging Zipcar members a flat $10 annual convention center tax rather than the $10-per-use tax paid on car rentals, he said.

The article notes that Pittsburgh’s tax is hurting the company, and that locals will be paying 40 to 50 percent of a tax designed to hit “non-locals.”

More on car rental taxes here.


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