Municipalities Try to Tax Car-Sharing
by Sean Fisher, Cincinnati, Ohio 
on 09.12.07
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.
::Via Sightline and WorldChanging
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Thanks for bringing this up. I heard about it recently and it makes me so angry! As a fellow Flexcar member (and avid fan!) from outside the Seattle area, I wonder how best I can help contribute to the efforts against the tax.
What the F?
Someone is looking for ways to generate revenue, but is having trouble seeing the forest through the trees.
If they encourage car sharing, they will save money on road repairs and emergency services (I know Seattle has its share of potholes). If they tax it, they may lose revenue by losing sales, and potentially put more cars on the road.
Good enough for government work.
Perhaps the car sharing companies should just sell cars for the day, and then take that car as a trade-in the next day for a different one of equal value, rinse, repeat.
Someone wants to be re-elected on the evidence of having balanced the budget - real world impact no matter.
Fairtax. Check it out.
My wife and I just visited Seattle and rented a car because I thought we would be taking trips out of town at each end of the week there. Our plans changed and the cost of parking the vehicle downtown each day exceeded the rental cost. We turned in the car after paying for parking one day. There was a rental car office across the street from our hotel, which of course, did not include the airport rental car tax, but we did not need a car staying in the city.
We discouraged others from renting who were going to get a car just to be flexible and to get downtown from SeaTac. One solution may satisfy the rental car companies somewhat would be to exclude visitors from using Flexcars, if that is not already the case. If there is anything we can do to let King County know that is a wrong move, let us know.
I know that in California when folks want to be able to buy sustainable beef that is processed humanely on the farm instead in a third party slaughterhouse (as regulated by the FDA), the farmer gets around this by instead selling people shares of the cow. Buy owning the cow, there is no public sale of the beef. Perhaps car sharing companies can do something similar, in which members are actually sharing ownership of the cars and then agreeing to let others borrow it and pay others to manage the process etc?
My wife and I gave up our car six years ago and were early members of Flexcar in Portland. Love the concept and the service. This stupiidity on the part of King County matches the Oregon legislature's tunnel vision in taxing hybrids higher than SUVs to maintain highway maintenance revenues, because the former weren't bringing in the same level of gas taxes as older model cars. Classic can-t-see-the-forest-for-the-trees thinking. I THINK Oregon fixed this. . . .