Taxes On Car Sharing Eclipse Sales Tax Rates

Car-sharing services are a great way to save on all the expenses of owning a car while still getting to use it for short trips. But they would save you even more money if they weren’t being taxed at sometimes more than double than the going sales tax rate. That’s because many states are taxing car-sharing services just like they were rental cars, a new study comparing taxes on car-sharing services across the nation shows.

The taxes and surcharges were designed for regular car rentals whose daily rates are several times what you would pay for a few hours with a car-sharing service. But when you’re just renting a car for an hour in New Jersey, an $8 rental becomes a $13 rental after a $5 per transaction fee that was created for rental cars gets levied. That $5 fee is more than half of the base price.

And in seven of the 25 largest cities included in the study, taxes on a one-hour reservation were around 30%.

Car-sharing services take a significant burden off the community by taking more cars off the road, which leads to less wear and tear on roads, fewer accidents and is better for the environment. It would behoove forward-thinking municipalities to encourage car services, a market that is highly price-sensitive, by making the taxes on them more reasonable and fairer relative to daily car rentals.

Taxes on Car Sharing Outpace Sales Tax Rates, Study Finds [NYT] (Thanks to Barbara!)