Hawaii works for rental car companies, but taxpayers fund their competitive deals in return.
The significant decline in the Maui Turo and other peer-to-peer listings is partly due to the low prices car rental companies can offer.
According to an April 2020 report from NetChoice, car rental companies receive approximately $4 billion a year in tax breaks, loopholes and subsidies nationwide.
A deeper dive into Hawaii’s economy showed that large car rental companies received $15.2 million in state subsidies and were exempt from $13.5 million in sales taxes.
In Hawaii, it’s because these companies have to pay a 0.5% tax on vehicle purchases, while their peer-to-peer competitors pay a much higher rate of 4-4.5%, the tax general state excise.
The deduction of rental car tax is specified in wholesale transactions (sales of tangible goods imported for resale at 1/2 percent), according to the Hawaii State Department of Taxation.
Car rental companies also pass on vehicle registration fees paid to the state as part of the Vehicle Licensing Fee (VLF) to their customers, costs that Turo hosts are required to pay as part of their rental fee. registration and registration of vehicles.
At least five states have introduced bills to close their similar sales tax loopholes, including Massachusetts’ HB 2976, Georgia’s HB 1158, Maryland’s HB669 and SB688, Washington’s HB1572, and Washington’s HB1632. Arkansas.
Closing doors to breaks and loopholes will likely incur additional costs for customers and balance price offers between rental and peer-to-peer services.
“Turo currently pays state taxes, and for several years Turo has been working with policymakers on how best to establish a regulatory framework for peer-to-peer car sharing in Aloha State,” said the Turo spokesperson Catherine Mejia. “Turo is committed to being a good neighbor and contributing to the local communities we serve, and Hawaiʻi is a special place with amazing hosts. When local residents and visitors choose Turo as their mode of transportation, they are giving back to the local economy.
The Hawaii house committee did not respond to a request for comment.
Airport parking restrictions were another obstacle for Turo in a crackdown by Kahului airport security.
“We understand that new policies are now being applied at Kahului Airport,” Mejia said. “While Turo believes in fair access to airports, we are actively working to find a solution with the appropriate local and state authorities to resolve this issue on behalf of our community.”
Turo suggests hosts consider offering delivery to other convenient locations like a guest hotel, while those conversations and negotiations are ongoing.
Turo has taken several steps to ensure its longevity, including announcing its entry into the public stock market (TURO) earlier this month.
To help the host community grow their businesses, Turo has committed $30 million in the second half of 2021 to put money in hosts’ pockets and increase the profitability of their Turo businesses. The program known as the Turo Seed Initiative offers a $15,000 interest-free loan through LoanGuide to buy a car and list it on Turo.
The peer-to-peer service also offers a host team to navigate fluctuating prices and demand on Valley Island.
“We understand that fluctuations in demand that some of our guests may see on Maui – due to both the COVID pandemic and the seasonal nature of travel business – can be difficult to manage,” said Mejia. “We have a dedicated host team at Turo who are always ready to help our hosts with any questions they may have about pricing and demand.“