NCPA - National Center for Policy Analysis

IF YOUR ZIPCAR IS COSTING MORE, THE TAXMAN MAY BE TO BLAME

June 20, 2008

In cities around the country, fans of Zipcar Inc. and other car-sharing companies are seeing prices rise for those jaunts to the grocery store.  For that, they can blame the taxman, says the Wall Street Journal. 

As car-sharing companies have enjoyed skyrocketing growth in recent years, several state and city governments have ruled that car-sharing companies need to charge their members the car-rental taxes that are already paid by large rental car-companies, such as Hertz and Budget.  But since customers often use car-sharing services for just a few hours, those extra charges can end up making members' bills a lot higher, says the Journal.

For example:

  • In Pittsburgh, a two-hour errand run now costs about $22 instead of $18, not including sales tax.
  • In Seattle, two hours of Zipcar use is now about $21 instead of $19, without sales tax.
  • In New York, car-sharing service members pay the state's 5 percent rental-car tax -- which comes out to about $1 more on a two hour Zipcar rental there.
  • In New Jersey, members must pay the state's $5 per rental "Domestic Security Fee."
  • In Philadelphia, members pay a 2 percent state rental-car tax, plus a $2-per-rental state tax, and the city's 2 percent rental-car tax.

A few areas have allowed partial exemptions:

  • 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 tax of $10, instead of the $10 per rental it charges customers of traditional rental-car companies.
  • So far, only Portland, Oregon has given car sharing a total exemption from rental-car taxes.

While car-rental companies and car-sharing companies don't currently see eye-to-eye on who should be exempt from the taxes, both are hoping for some type of federal solution, says the Journal. 

Source: Sarah Nassauer, "If Your Zipcar Is Costing More, The Taxman May Be to Blame," the Wall Street Journal, June 19, 2008.

For text:

http://online.wsj.com/article/SB121383390638486797.html  

 

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