Ohio Supreme Court to Rule on Columbus Tax

COLUMBUS, Ohio -- Car rental operators here are awaiting an Ohio Supreme Court decision on whether a new $4-a-day car rental tax will take effect or go before a public vote.

Because $4 a day represents a hefty price hike for car rentals, Columbus operators fear that many customers will opt to rent outside of city limits if the tax goes into effect.

"The city argued that the extra tax would not affect demand, but that's beyond ridiculous," said Mike Reynolds, owner of a Thrifty franchise in Columbus. "A 20% increase in the price of any product will absolutely and positively affect demand."

Rental customers in Columbus already pay a $5.75% sales tax. In addition, airport customers pay a 10.19% concession fee and a $3.46 one-time charge to help pay for a new parking garage.

If the tax goes into effect, its revenues will be funneled into the city's general fund. Exempt from the tax are rentals lasting more than 30 days, rentals by a local resident whose own vehicle is being repaired or serviced, and rentals of vehicles designed for more than nine passengers. The tax would expire at the end of 2005, unless the city council votes to extend it.

A coalition of car rental companies, working closely with the Ohio Taxpayers Association, launched a referendum drive after the city council passed the tax June 24. The group had 30 days to collect 3,992 signatures to place the tax ordinance on the Nov. 5 ballot. But after the group filed the petition with city hall July 24, City Clerk Timothy McSweeney called the petition invalid, citing a technicality. He refused to submit the petition to the city council.

Nonetheless, McSweeney forwarded the petition onto the Franklin County Board of Elections to see whether it contained the required 3,922 valid signatures.

On July 31, one day before the rental tax was scheduled to go into effect, the pro-referendum group learned that the elections board had verified more than enough signatures. Attorneys for the rental industry coalition, Tom Hill and Phillip Harmon, then petitioned the Ohio Supreme Court to halt collection of the tax and to order McSweeney to submit the petition to the city council.

The complaint, filed on behalf of local Budget franchise manager Kevin Miles, argued that the referendum petition complied with all city requirements. As such, the complaint said, the city council was legally bound to either repeal the rental tax ordinance or place it on a public ballot.

On August 2, just one day after the rental tax went into effect, the Supreme Court ordered that collection of the tax stop until the justices could rule on the issue.

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