Municipalities Try to Tax Car-Sharing
We love the concept of car-sharing, which allows individuals to go car-free without being relegated to the side of the car-centric areas in which many of us live. Unfortunately, not everyone shares our enthusiasm. On the heels of a similar attempt in Chicago just last year, King County, Washington (which encompasses Seattle), will start taxing car-sharing services as if they were rental car companies. In King County, that means that car-sharing customers will be taxed an extra 9.7 percent above and beyond the usual state and local taxes. As you might expect, car-sharing customers (and companies) are fighting back. A Flexcar petition is making the rounds, looking for a car-sharing exemption to the rental car tax. It states that because car-sharing is used predominately locally, rental taxes aimed at tourists and visitors should not apply.
The Seattle-based Sightline points out that car ownership already had a tax advantage over car-sharing in King County. The new rental tax, which bumps the total tax to 18.7 percent, marks a huge disadvantage towards car-sharing.
Buyers of new cars, in contrast, get a sales tax discount, in Washington (and British Columbia too). They can subtract the price of the car they traded in from the price of the car they bought and only pay sales tax on the difference. The effective tax rate on cars, therefore, is much lower than on other taxed goods. If your trade-in is worth half as much as your new purchase, for example, the effective tax rate is halved.
This is step back for a region that considers itself one of the "greenest" in the U.S. We hope someone in local government will take a look at the benefits of car-sharing - promoting less car usage, less pollution and congestion - and make the service more competitive with car ownership than car rental.