The biggest of those loopholes is the simple fact that rental car companies are exempt from paying sales tax when they buy new vehicles. According to a report published this week by NetChoice, that sale tax exemption saved rental car companies more than $3.5 billion last year. In California, where other residents have to pay a 7.25 percent tax on the price of a new car, that tax break saved rental car companies more than $676 million in 2019.
That sweet deal isn’t available to users of Turo or GetAround. Good luck telling your state that the reason you didn’t pay your vehicle sales tax bill is because you plan to rent the car as a side hustle.
“State governments hand out billions to companies like Enterprise and Hertz, providing them an unfair advantage over competitors, like peer-to-peer car-sharing services,” says Steve DelBianco, NetChoice’s president.
The NetChoice report also examines the so-called “vehicle license fees” tacked onto the cost of renting a car through traditional platforms such as Enterprise or Hertz. Consumers probably don’t think about that fee as anything different than a tax—but in reality, it simply provides additional revenue for the rental car platform and does not go to local or state governments.