A battle looms in the Utah Legislature between traditional car rental companies and an online car-sharing firm called Turo — akin to clashes between Uber and taxi companies or Airbnb vs. hotels.
Car rental companies are pushing lawmakers to force the San Francisco-based Turo to pay all the taxes they face, complaining it now escapes many and thus can offer lower-cost rentals.
Turo says it isn’t a car rental company — and should not be taxed like one — but rather is a different car-sharing platform that connects owners (usually of luxury cars) and renters for a fee. Turo provides insurance coverage for owners and other services that it says car rental companies do not face.
So is Turo a car rental company?
The slogan on its website this week was “Rent Better Cars.” Its online listings this week offered rentals in Salt Lake City ranging from a low of $23 per day for a Toyota Scion tC to a high of $508 per day for a BMW M4.
Turo notes that it allows drivers to book rentals, chat with car owners, arrange pickup and drop-off spots, and make payments through its app. Renters skip airport counter lines or attempted up-sales by agents.
A customer checks in at a Hertz car rental counter at Hartsfield-Jackson Airport, Wednesday, Nov. 27, 2013, in Atlanta. More than 43 million people are to travel over the long holiday weekend, according to AAA. (AP Photo/David Goldman)
Lou Bertuca, senior government relations manager for Turo, explained to a panel of state lawmakers why it uses that “car rental” wording while it contends it is different from Hertz or Budget.
“Alaskans have 100 different words for snow. I wish that there were more words for getting a car and having it come up on a Google search,” he said. “You have to have a marketing term in there, and that marketing term is ‘rent.’ But nowhere on our site do we say we are a car rental company.”
Rep. John Knotwell, R-Herriman, called it “a distinction without a difference. I think it’s relatively meaningless, to be honest.”
But Mike Taylor, vice president of Budget Rent A Car and president of the Car and Truck Rental and Leasing Association, told lawmakers Turo is using its purported distinction to escape tourism and sales taxes along with airport fees.
“I am very concerned that we would even discuss the situation of taking one competitor and giving them a 30 to 50 percent advantage over other competitors,” he told lawmakers. He said local governments stand to lose tax revenues if Turo does not collect the same taxes.
What makes Turo different?
But Bertuca says Turo’s model is far different from that of companies like Budget.
For example, he says, Turo owns no cars. Rental companies do. By law, they do not pay sales tax when they purchase their fleets. Instead, they collect sales tax from drivers who rent their cars or from those who eventually buy them at the end of a car’s rental career.
A vehicle with its rear tailgate opened sits parked in front of an Enterprise Rent-A-Carl location, Wednesday, Oct. 2, 2013, in Dallas. (AP Photo/Tony Gutierrez)
Bertuca says the car owners who use Turo paid sales tax when they bought their vehicles, so they need not charge it to renters now.
Sen. Curt Bramble, R-Provo, co-chairman of the Business and Labor Interim Committee, asked if car rental companies would rather have their exemption removed when they buy fleets, and quit charging sales tax instead to renters.
“Can I do backflips for you?” Taylor said, adding it would likely greatly reduce what renters pay and make car rental companies more competitive.
Contrasts in insurance
Bertuca says Turo has other differences. He says car rental companies by law are not liable for any damage caused by renters — the renters are on the hook, and they must buy insurance or pay for damages out of their own pockets.
Turo’s agreement with each owner says “that if anything were to happen to his or her car, we will cover the damage to the car up to the replacement cost and repair,” Bertuca said. It is a cost that rental car companies do not cover.
But Jesse Hubbard, president of Rugged Rental and Sales in Salt Lake City, said Turo does sell additional insurance to renters to cover potential damage they may do to others cars and individuals.
Hubbard’s company rents four-wheel-drive and similar vehicles, and must pay a 10 percent Salt Lake City International Airport fee “just to drive out and pick up a customer.” He complains that people making money through Turo do not do that.
“What we are asking for is simply a level playing field for all the car rental companies,” he said.
Bertuca insisted to lawmakers, “We are not a car rental company.” While others argue that if it walks like a duck and quacks like a duck, it’s a duck, Bertuca said, “A platypus is not a duck” — and insisted Turo is that different.
“We don’t want to throw a wet blanket on this emerging technology,” he said.
Bramble said his committee held an initial hearing to understand what the different sides are contending. He added he’s optimistic the companies and lawmakers can find ways to allow all sides to operate — as happened in earlier fights over Uber and Airbnb.
