Minn. Bill Cuts Carsharing Taxes, Not Rental

car2go's carsharing service left the Twin Cities due to the high taxes charged on vehicle rentals. Photo via Wikimedia.
car2go's carsharing service left the Twin Cities due to the high taxes charged on vehicle rentals. Photo via Wikimedia.

Minnesota’s Senate Tax Committee has passed a bill that would exempt carsharing or hourly rentals from the higher tax rates charged on traditional vehicle rentals, according to a report by Minnesota’s Senate DFL.

Sen. Scott Dibble (D-Minn.) created the bill after car2go stopped its carsharing service last year in Minneapolis and St. Paul due to the high taxes.

In Minnesota, most short-term vehicle rentals are subject to general sales tax, a 9.2% rental tax, and a 5% fee — in addition to any local sales taxes in effect within the area of where the car is rented, according to the report.

The bill would exempt hourly rental vehicles from the 9.2% rental tax and the 5% fee in an effort to support existing carsharing companies and attract new ones, says the report.

From 2013 until December 2016, there were about 600 cars available for sharing in the Twin Cities metropolitan area. However, that number has dropped to around 175 vehicles since car2go left last year, according to the report.

The bill has now been passed to Minnesota’s Transportation Committee.

Click here for the full Senate DFL report.

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