Car-Sharing, Rental Agencies Spar Over Michigan Regulations

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A couple sitting in the back of an SUV rented from the Turo sharing app. Image courtesy of Turo.

A Michigan bill package aims to regulate and tax peer-to-peer car-sharing, which users say could increase prices, but traditional rental agencies say they are “agreed upon” standards.

Turo is like Airbnb for cars; an owner rents out vehicles to help cover the cost of insurance, registration and rising gas prices. Turo offers convenience and a wide range of vehicles, including sports cars, Escalades and Teslas, often at a lower cost than rental car agencies.

For example, Michiganders may rent a 2015 Maserati Quattroporte for $203 per day or a 2011 Ford Fiesta for $38 per day.

Turo opposes the bill package.

“These bills pushed by anticompetitive rental car conglomerates would establish a new double tax on the growing and innovative peer-to-peer car sharing industry at a time when many Michigan leaders are saying the state should be working to attract new economic activity, not drive it away,” Turo said in a statement.

A 2020 report by tech advocacy group NetChoice said big rental agencies like Enterprise, Hertz or Avis, which have fleets ranging from 300,000 vehicles up to 1.2 million vehicles, are exempt from paying state sales tax on fleets---a loophole saving the companies $3.5 billion annually.

Turo boomed during the COVID pandemic when many rental car agencies sold off fleets. At the same time, travel slowed, and a semiconductor chip shortage and supply chain issues shorted new vehicle production, driving up the price of new and used vehicles.

According to its active host interactive map, Turo offers more than 500 vehicles in the Detroit area, depending on the host availability. 

Lawmakers amended the plan after The Center Square reported in May it aimed to “triple-tax” the emerging industry. Turo users already paid sales and use tax on vehicles, which House Bills 4915, 4916 and 4197 aimed to charge again, on top of other fees.

In late September, during the Regulatory Reform Committee, Rep. Pat Outman, R-Six Lakes, said the amended bill avoids double-taxing Turo users.

Outman didn’t immediately respond to a request for comment.

The plan would require the shared vehicle owner and driver to be insured. Auto insurers could exclude coverage for some claims under shared vehicle insurance.

Enterprise Holdings, which includes Alamo, Enterprise and National rental car agencies, said the legislation clarifies decades-old tax law.

“The proposed legislation is an agreed upon set of standards for an emerging segment of the car rental industry, bringing clarity to taxation rules by restating existing tax laws that have been in Michigan for decades,” Enterprise Holdings said in a statement. “The legislation reflects model legislation that took years to create and received substantial input from stakeholders, including but not limited to: the property and casualty insurance industry, auto manufacturers, consumer and auto safety advocates, along with car rental, car sharing and peer-to-peer car rental companies.”

This summer, Turo won a permit to use vehicle sharing at the Detroit Metro Airport---directly competing with rental car agencies.

Turo estimates average hosts earn $10,000 a year before expenses.

We thank The Center Square for reprint permission.

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