Enterprise Holdings, which operates Alamo Rent A Car and National Car Rental as well as its flagship Enterprise Rent-A-Car brand, spoke out on behalf of its customers this summer in support of H.R. 4175, the “End Discriminatory State Taxes for Automobile Renters Act of 2009.” Today, the company – a member of the nonpartisan Coalition Against Discriminatory Car Rental Excise Taxes – announced it also will begin publicly advocating on behalf of its WeCar car-sharing customers and reminding government officials about the unintended consequences of local car rental excise taxes.
“We have been actively working for years to draw attention to these unfair taxes – which single out local as well as out-of-town car rental customers – because they are arbitrary, discriminatory and misleading,” explained Raymond T. Wagner, Vice President of Government and Public Affairs for Enterprise Holdings, which, through its regional subsidiaries, operates the world’s largest fleet of fuel-efficient vehicles. “And we intend to continue speaking out on behalf of our customers, regardless of whether their rental is for an hour, a day, a week or longer.”
On June 15, Wagner testified in support of H.R. 4175 before the U.S. House of Representatives’ Subcommittee on Commercial and Administrative Law, alongside the National Consumers League’s Executive Director, Sally Greenberg.
Coincidentally, that same day, a Queens, N.Y., Supreme Court Justice ruled in favor of a for-profit car-sharing company and agreed that the defendant was in ‘”the trade or business of renting or leasing motor vehicles” as those words are traditionally and plainly understood. As a result, the Court found that although a members-only car rental company may advertise itself as an alternative to “traditional rental cars,” it may nonetheless claim the rental-car law’s protections. In other words, the Court stated, “this bargain – use of a car in exchange for a fee – appears a little different from [‘traditional’] companies.”
Wagner may have been surprised by the timing, but not by the car-sharing company’s legal arguments or the Court’s concurrence. “We have been offering local car rental for more than 50 years, growing one neighborhood at a time,” he explained. “So we have always understood that our automated WeCar car-sharing operation is a natural extension of our Enterprise neighborhood network and business rental program.”
The Enterprise Rent-A-Car network of almost 6,000 neighborhood branch offices – located within 15 miles of 90 percent of the U.S. population – is unparalleled in the car rental industry. In fact, almost five years ago, Auto Rental Newsmagazine (Jan./Feb. 2006 issue) confirmed that local car rentals represent more than half of all car rental industry revenues and noted the irony: “If the local market makes up the majority of the total market, then the general public can’t assume that rental taxes will, by default, fall to the responsibility of tourists.”
Later that same year, Auto Rental News (Nov./Dec. 2006 issue) highlighted the fact that a for-profit car-sharing company was seeking exemptions from Chicago’s 6-percent tax and Illinois’ 6-percent tax on auto rentals. At the time, Enterprise stated that any tax-exempt status was an issuefor the government to decide, and then stressed the difference between non-profit car-sharing operations and for-profit car-sharing companies: “We feel excise taxes are bad across the board. It’s bad for everybody, including car-sharing companies. But we feel a distinction shouldn’t be made between hourly or daily rentals. It’s still the same concept – you’re renting a car when you need it.”
This year’s New York court ruling underscored that very point and called into question any marketing claims that attempt to justify double standards or special subsidies from local elected officials. Even Zipcar, Inc.’s S-1 SEC filing on June 1 acknowledged the following: “To date, most state, county and city taxing authorities have not required us or our customers to pay a rental car tax each time a Zipcar is reserved. However, there can be no assurance such tax will not be imposed on us and our members in the future.”
In contrast, Enterprise Rent-A-Car’s car-sharing and car-rental customers have always been taxed at the same rate. Enterprise provides customized car sharing to corporate campuses, universities and municipal governments through its WeCar program in 17 states.
“We obviously operate a for-profit company, including our car-sharing operations,” Wagner said. “That means we accept all of the challenges, responsibilities and obligations that go along with running a successful, sustainable local car rental business, while still supporting non-profit community-based initiatives.”
Meanwhile, millions of people rent cars from Enterprise every day because their vehicles are being serviced or repaired after an accident, or because they temporarily need a larger car for special occasions, family reunions or visiting friends. Rental cars also are popular with environmentally conscious consumers who prefer to use mass transit or to drive smaller, fuel-efficient vehicles Monday through Friday, but require other transportation options for weekend errands and getaways. Often heavily discounted on weekends, frequently as low as $9.99 per day, rental cars likewise are a popular option for those who simply can’t afford to purchase and maintain a vehicle.
The National Consumers League notes that car rental excise taxes can be regressive in their impact on local low-income residents, many of whom do not own a vehicle and instead rent one. This is particularly true for Enterprise Rent-A-Car customers – nearly one in four earns less than $40,000 annually; one in 10 earns less than $30,000; and one in 20 earns less than $20,000.
WeCar Car Sharing
That is one of the reasons that Jay Ryan, Vice President of the Alamo, Enterprise and National brands in Florida, objected last year to the state legislature’s proposed doubling of car rental taxes, from $2 per day to a $4 daily rate. Ryan further pointed out that car rental excise taxes impact car-sharing programs like WeCar, which had just been launched on the University of South Florida campus. He stated, “This is just another example of why the Coalition universally opposes car rental excise taxes. These taxes are unfair, period. And they are particularly so for students and others who cannot afford to operate their own cars.”
Because car rental excise taxes continue to proliferate throughout the country, Wagner is encouraging smaller for-profit car-sharing companies like Zipcar to join the broad-based Coalition Against Discriminatory Car Rental Excise Taxes. The Coalition already includes car rental and car sharing, such as Enterprise Rent-A-Car’s WeCar, plus travel industry, consumer and insurance organizations.
“We need to speak up on behalf of our customers and let legislators know, over and over again, how wrong it is to target one group of consumers with special excise taxes,” Wagner stated. “This national epidemic of car rental taxes is particularly appalling because they frequently are sold to voters as ‘tourist taxes’ to garner public support at the polls.”
As recently as last week, Chief Strategy Officer Greg Stubblefield delivered a similar message on the Charlotte Business Journal editorial pages. “Car rental taxes, in effect, penalize these consumers for choosing sustainable transportation alternatives, regardless of whether they are renting for an hour, a day, a week or longer,” Stubblefield stated. “And we call on all federal, state and local officials – including Charlotte’s leaders – to thoughtfully consider the unintended consequences of how they fund important projects and programs, especially during these tough economic times.”