NJ Bill Would Exempt Car-sharing from Car Rental Tax

According to an Associated Press article, legislation has been approved in New Jersey by the Commerce and Economic Development Committee that would exempt car-sharing programs from the $5 surcharge on vehicle rentals that was established in 2002. 

Supporters say this would help increase popularity of car-sharing programs which would reduce pollution and roadway congestion as well as ease parking problems. 

"This is a new and innovative program that can bring savings to taxpayers and dramatically improve the quality of life for urban residents," said Ruben J. Ramos Jr., D-Hoboken, who is sponsoring the measure in the Assembly with fellow Democrat Ralph Caputo of Belleville.

However, traditional car rental companies maintain that car sharing is a merely a form of car rental and therefore should not be exempt from an excise tax that singles out car rental companies. While traditional RACs oppose excise taxes that single out car rentals, they say that the rental length-an hour, a day or a week-is irrelevant to taxation issues.  

On the legal front, Zipcar, the largest car sharing company, is already aligned with traditional car rental companies regarding vicarious liability. Last year, the New York Supreme Court ruled that Zipcar is protected under the Graves Amendment, the 2005 federal law that shields car rental agencies against liability for accidents caused by drivers of rental cars.

The judge in the case found that although Zipcar advertises itself as an alternative to traditional rental cars, the company "is in 'the trade or business of renting or leasing motor vehicles' as those words are traditionally and plainly understood."

The bill is now with the Appropriations Committee, which has not yet scheduled a hearing on the proposal.

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