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Seattle Car-Share Customers Slapped With Rental Tax

Europe pioneered car-sharing.  Seattle and Portland have become the cradle of it in the U.S.

The idea is that people who don’t want to own cars rent them by the hour, by paying a membership fee.

Good for the environment, good for the wallet.  But starting Thursday, Seattle car-sharers will have to pay a nearly 10-percent car rental tax.  They say they’re being penalized for doing the right thing for the environment.  Correspondent Cathy Duchamp explains.

Car-sharing is pitched as a way to wean people off automobiles, to reduce greenhouse gas emissions.  A good thing.  But not just a green thing.

Steve Orser: “We use these vehicles as kind of corporate cars.  There are so many of them right downtown.  We’re able to get cars, pretty much at a moment’s notice.”

That’s Steve Orser, a real estate developer.  His company — Harbor Properties — has a corporate account with “Flex Car.”

The private company buys cars same as rental companies do.  Then it leases parking spaces for 350 cars all over Seattle.  Flex Car rents them out for $16 an hour.

Sitting behind the wheel of a Honda Hybrid, Orser says Flex Car beats out car rental companies on convenience.

Steve Orser: “I don’t have to figure out where a Hertz might be or go to the airport or even go downtown.  Within a matter of minutes I can be on the computer reserving it, and then straight out to the car, using it.”

That kind of talk has generated envy and interest among traditional car rental firms.  Especially a few months ago, when the companies found out that in Washington State tax-collectors had exempted Flex-Car from a 9.7 percent car rental tax.

Not fair, says Laura Bryant, spokeswoman for the parent company of Enterprise, Alamo and National Car Rental.

Laura Bryant: “I think trying to differentiate between depending on how long you actually rent a car, that’s certainly a very gray area.  If you rent it for 2-3 hours, then that’s almost a day, and what is the difference?”

The Washington State Department of Revenue agreed. The tax break for Flex Car went bye-bye.

The phone started to ring in the office of State Senator Jeanne Kohl-Wells.

Jeanne Kohl-Wells: “Mainly I heard from constituents that they didn’t think it was fair that they pay more taxes.  They’re trying to do their part to reduce traffic congestion and not own a vehicle.”

Kohl-Wells wants to re-institute the tax break for car-sharing.  But its tricky. You can’t enact a law that benefits one company.  And car rental companies want the tax break too?

So what about repealing the tax all together?  Well that would cost the the state $33 million a year in lost revenue.

Flex Car user Steve Orser is sticking with the service despite the new tax, though he wants a fix.

Steve Orser: “We’re so aware about global warming.  We just need to cut down on single vehicle usage and gasoline usage all together.  Here’s where the rubber meet the road, where we can get a chance to do that, and I hope the state follows through on that.”

For its part, Flex Car sees the loss of the tax break as a speedbump.  The company just announced its merging with Boston-based Zip car.  That creates a car-sharing co-op that will span the nation.

Flex Car still gets a car rental tax break in Portland.  Company officials say city tax code allows for the exemption.

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