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Home Business The growing popularity of US car-sharing apps is fueling a tax debate

The growing popularity of US car-sharing apps is fueling a tax debate

PHOENIX (AP) – When Chris Williamson was in the market for a new family car, a timely ad and conversation with a colleague convinced him to try something out of the ordinary. He bought a BMW 3 Series Convertible and takes over the payments by leasing it to a peer-to-peer car sharing app called Turo.

It allows his family of seven to have a nicer car, essentially free.

"It's great to have a bit of extra income and not have to worry about car payments," said Williamson, a teacher from the Phoenix area.

But its customers and others using car-sharing apps in the United States get their rent tax-free. This makes them a destination for car rental companies, airport authorities and municipalities. Users of Upstart apps should pay the same taxes and fees as traditional car hire.

It's about hundreds of millions of dollars in revenue that cities and airports use to pay for stadiums and convention centers, or to finance police, fire departments, and other general operations.

"These companies are very sophisticated, technology-savvy companies, each investing hundreds of millions of dollars," said Ray Wagner, vice president of government relations at Enterprise Holdings, the parent company of the country's largest car rental company. "They should be expected to follow the same rules as a small mom and pop car rental company in rural Arizona."

Peer-to-peer car sharing apps like Turo are becoming increasingly popular, allowing owners to rent their vehicles. The services, however, encounter opposition from car rental companies and legislators who want to tax and regulate them like car hire. (2.May)

According to Turo, Enterprise is trying to suppress the competition.

Car-sharing companies like Turo and GetAround work like Airbnb for vehicles, so people can rent their cars when they're not using them. Founded a decade ago, they have recently attracted millions of dollars from venture capitalists and other investors.

They are in conflict with the car rental industry, worth $ 42 billion a year, and the tourism and government agencies that tax them and govern security and consumer protection.

Fighting is heating up in about three dozen State legislatures and local courts and tribunals. Lobbyists are struggling with lobbying from both sides, struggling to regulate an emerging industry without destroying it – a repeat of recent battles between the taxi industry and Uber and Lyft, and between hotels and Airbnb.

"The tragedy would be if we spit out something in its infancy that has great potential," said Republican Travis Grantham, a Turo-backed lawmaker that would exempt car-sharing from all rental vehicles except taxes.

Tourism taxes have long been popular with politicians who can raise money for local priorities with hotel room and car rental surcharges – which are mostly paid by visitors who vote elsewhere.

Forty-four states levy excise taxes on car hire – in addition to standard VAT if an application is applied – and most allow local governments to levy their own taxes, according to a March study by the Tax Foundation, a conservative think tank. Airports often pay surcharges to pay for large rental car facilities.

Taxes, fees and surcharges can increase the rental cost of a car by up to 30 percent while generating millions of dollars.

In the metropolis of Phoenix, the baseball league, which attracts fans every March for spring training in ten stadiums, could see a significant decline in sales as the new platform for car rental grows, said its president Jeff Meyer. Car rental taxes help cover debt payments for some Cactus League facilities and the Arizona Cardinals football stadium.

California, Oregon and Washington passed a car sharing law years before the industry started, and Maryland did so last year. Practice-based bills have been introduced in more than 30 other states, with fierce controversy in Alaska, Arizona, Colorado, Florida, Illinois, New Mexico, and Ohio.

Turo is also battling the Los Angeles and San Francisco airports for charges. In the meantime, the Chicago tax authorities have written that, according to company questions, car sharing is subject to motor vehicle tax law when answering questions from a corporate lawyer.

In Arizona, Enterprise advocates legislation that would tax carsharing like rental cars, and requires them to conclude agreements with airports to use their facilities, while Turo supports a proposal that exempts most Car Sharing companies from most taxes.

In Ohio, a detailed package of new regulations for carsharing companies has been added to the in-house version of the state's transportation budget. It came when the Columbus Regional Airport Authority paid a $ 140 million car rental facility based on a steady stream of car rental fees.

The peer-to-peer companies received a temporary suspension last month when the provision was removed from the accounts. But Senator Bob Peterson of Ohio, Republican No. 2, said he was expecting an independent bill to be introduced shortly.

"I think everyone agreed that this is a new industry that needs more regulation," Peterson said.

Both sides describe their position as fairness.

Proponents of more stringent regulations say that people who rent their cars for profit not only have to pay taxes, but must also meet the safety and transparency requirements associated with renting a car.

"The goal is to improve competitive conditions," said the Arizona Republican Republican, who sponsors legislation that treats carsharing companies like car rental companies. "They want all of these companies to work with the same rules and regulations so they can compete and win the best, whoever."

Turo's lobbyists point out that car hire companies are saving billions of dollars in taxes. Most states do not charge sales tax on vehicles that are sold exclusively for rental and allow companies to pass royalties on to customers.

Turo asks why its users should pay rental taxes if they are not exempt from other motor vehicle taxes that benefit car rental companies.

"Our host community is made up of individuals who are just trying to balance the cost of a car," said Steve Webb, vice president of communications for the company. "And Enterprise is this $ 24 billion goliath that uses its political connections to stifle innovation."

According to Turo, more than 95% of Turo's 197,000 "hosts" share three or fewer cars on the platform. However, some of the company's 350,000 listed vehicles are owned by people who rent small fleets.

Wagner, the leader of the Enterprise, describes it as a "politically motivated fiction" that Turo focuses on the taxes paid by people who occasionally put their car on the list.

For Williamson, the Phoenix instructor who rents his BMW through Turo, the prospect of his clients having to pay these taxes and surcharges is worrying. The people who rent his BMW want to seduce themselves. Sometimes he also rents his family's Honda Pilot SUV.

"Every time you start raising the price of something, you'll get people saying," Oh, I think we will not take the convertible this weekend. We will just consider everything Hertz has as something special, "he said.


Julie Carr Smyth, Associated Press, of Columbus, Ohio, contributed to this report.



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