Turo: Taxed or Axed?

Hawai‘i residents who purchased an extra car (or three) to capitalize on last year’s sky-high car-rental rates via peer-to-peer car-sharing apps, such as Turo, that broker personal vehicle rentals are getting nervous as a state lawmaker proposes banning the apps statewide....
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Peer-to-Peer Car Rental Ban Proposed

Hawai‘i residents who purchased an extra car (or three) to capitalize on last year’s sky-high car-rental rates via peer-to-peer car-sharing apps, such as Turo, that broker personal vehicle rentals are getting nervous as a state lawmaker proposes banning the apps statewide.

State Rep. Sean Quinlan [D, Oahu], who represents the North Shore, introduced a bill Jan. 19 that would ban the use of Turo or any similar car rental app outright. The bill, HB1500, is brief and devoid of the flowery “whereas” and “therefore” language that usually precedes the main text, detailing various compelling reasons for the bill that follows. It simply states that no person shall operate, use, or control a peer-to-peer car-sharing program in the state. Period.

Founded in San Francisco in 2009, Turo loosely  follows  the Airbnb model and easily eclipses competitors as the industry leader. The app launched nationally in 2012 and now boasts rental car availability in 4,500 cities nationwide.

Photo by Dan Collins

 

A related measure, HB333, which would have applied a laundry list of liability, disclosure, and accountability measures on the industry, was under consideration for three months last spring but was scuttled after  the House and Senate couldn’t reach an agreement on its final form.

While acknowledging that he doesn’t really expect the bill to pass, Quinlan’s stated intent was to “get the conversation started” about regulating peer-to-peer car rental apps, which surged in popularity last spring as visitors began returning to the island before the major car rental agencies could  restock their fleets. But that gives little comfort to folks who invested in a bunch of rental cars when used car prices were at their highest. If the law passes, expect a glut of used cars to hit the local market as Turo hosts unload their surplus vehicles. The bill is currently making its way through three committees before being debated in the House.

Critics contend that the apps undercut rental agency prices resulting in a loss of state tax revenue, a concern that might gain traction. The state requires that general excise tax and a rental car surcharge be collected for every vehicle rental. Although Turo seems disinclined to address the tax delinquency issue, but without a system in place to ensure that those listing cars on the app are in compliance with the law, it’s unlikely that the taxes and fees normally paid when a rental agency rents a car are being applied to the Turo rentals.

Some critics of the app object to people clogging residential streets with cars when  their rental fleet stands idle. In Honolulu, complaints about parking ultimately led to the city calling on the state legislature to act. The city permits car rental businesses in residential areas, but limits the fleet size to two cars that must be stored on private property. In a statement, Turo said that they have a Good Neighbor Policy in place to ensure that their hosts are mindful of community concerns, including parking, and that the company may restrict accounts that draw parking complaints.

Quinlan also objects to the low rates that some Turo listers charge, contending that cheaper rates degrade the quality (read “wealth”) of the visitors that Hawaii attracts. “We don’t want to do high-volume, low-spending tourism” here, he is fond of saying. “Unfortunately,” he asserts, “Turo makes vacationing in Hawaiʻi more affordable.” Visitors on a budget surely disagree–about it being unfortunate, at least.

Dan Collins

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