Legislature exempts HOURCAR members from 5% fee

Members of car sharing organizations across the country have to pay rental car taxes – in Minnesota it is a 6.2 % tax. At HOURCAR, we have always found this really irritating. Legislators know that most rental car usage comes from people visiting from outside the state border. So, states enact rental car taxes as a way of “exporting” taxes to people that don’t vote in their state, whereas, car sharing organizations are made up of local people who reduce their impact on the environment by walking, biking and taking transit for many of their daily trips. Just the kind of impact that the state intended when it set carbon reduction goals.

It gets worse. When a rental car company has more than 20 cars, they have to charge an additional 5% fee on top of the sales taxes and rental car tax. This past winter, we realized our hopes of expanding would have meant charging our members this additional fee. Thankfully, we found some state legislators who recognized that adding another 5% fee to our members’ bills would not be fair. So, this year, as part of the one non-controversial tax bill to be signed into law, HOURCAR was officially exempt from the 5% fee. We recently received word from the Department of Revenue that the change is official so we will not have to institute the charge.

Several of the legislators told us that they would like to exempt car sharing from the entire rental car tax – including the 6.2 % our members already pay – but unfortunately, in this impossible budget year, they would not have been able to move a bill that would reduce current state tax collections.

We wanted to take this opportunity to thank the legislators who worked to make this happen.

Our chief authors, Rep. Jim Davnie and Sen. John Marty carried the bill through committee and dogged it to the very end. Sen. Scott Dibble, a co-author, ensured that it made it through a Tax conference committee and onto the Senate Floor. These three legislators made certain that the HOURCAR provision was eventually rolled into the one tax policy bill with the noncontroversial items, so that it would be signed into law.

Also deserving our appreciation are the two chairs of the Tax committees, Sen. Tom Bakk and Rep. Ann Lenczewski who included the provision in their omnibus tax bills. Several other legislators, by co-authoring the bill or working behind the scenes, helped along the way, including Sen. Larry Pogemiller, Rep. Frank Hornstein, Rep. Melissa Hortman and Rep. Erin Murphy. HOURCAR thanks all the legislators who voted for the final package and Governor Pawlenty for signing it. Also, we thank the people at the Department of Revenue for confirming that HOURCAR members are now exempt from the 5% fee.

There is a growing understanding of what our members are doing. We expected the same kind of confusion about car sharing that HOURCAR staff first experienced when they took this issue to the legislature. But, four years later, people are beginning to understand car sharing and the contribution that our members are making to the environment.