ACRA Takes the Capitol

The American Car Rental Association (ACRA) convened its third annual “Day on the Hill” on Sept. 21 in Washington, D.C. to meet with congressmen and senators and their staffs. The goal was to educate legislators on issues affecting the car rental industry.

This year’s event drew 32 ACRA members and associate members from across the U.S. Sharon Faulkner, executive director of ACRA, organized the event, while ACRA’s lobbyist Gregory Scott arranged the meetings with legislators and their staffs.

The event kicked off on Tuesday with an ACRA board meeting and general session. The meetings were followed by a reception sponsored by ACRA PAC, the association’s new federal political action committee, for Congressman Rodney Davis (R IL-13).

On Wednesday, participants were split into five groups to traverse multiple House and Senate office buildings, armed with talking points on issues directly affecting car rental operations such as like-kind exchange, excise taxes, and peer-to-peer regulation.

Excise Taxes

ACRA supports bills HR 1528 and S 1164, both termed the “End Discriminatory State Taxes for Automobile Renters Act.”

The bills would enact federal legislation to provide car rental customers with the same federal protection from discriminatory state and local taxes that customers of the bus, airline, motor freight, rail, and maritime industries currently enjoy.

The bills propose that these existing taxes would be “grandfathered,” while state and local governments would also be free to impose non-discriminatory taxes such as income, sales, or property taxes.

The ACRA groups reminded legislators that these taxes are by definition discriminatory and place an undue burden on interstate commerce, which Congress, not state or local governments, has the sole right to regulate. These taxes also disproportionately affect poor Americans, not big businesses.

Further, half of all car rentals in the nation are “local,” undermining the claim by local politicians that only out-of-towners pay car rental excise taxes. While being rented locally, these rentals often include interstate travel.

Peer to Peer

“Peer-to-peer” networks in the travel industry, including Airbnb and Uber, use web-based platforms to use privately owned assets in commercial transactions. This “sharing economy” has also reached car rental, with companies such as Turo and Getaround renting privately-owned vehicles to the public.

While the “traditional” car rental industry is regulated to ensure consumer safety, pricing disclosures, and accessibility, peer-to-peer car rental companies have claimed that they are governed by the nation’s communications laws rather than federal and local safety and commerce laws.

The ACRA delegation conveyed that it is not opposed to these new business models and welcomes innovative competition. However, ACRA believes that peer-to-peer car rental companies should comply with laws and regulations that promote those safeguards, including the Americans with Disabilities Act, insurance mandates, and federal law that grounds rental vehicles with open safety recalls.

Like-Kind Exchange

A like-kind exchange (LKE) is a tax strategy that allows companies to swap an investment asset such as a rental car with another and defer the tax on the proceeds until the property is sold for cash.

The ACRA groups learned from the meetings that there is no imminent legislation affecting LKE. However, it may become part of the larger conversation on tax reform, which started with former House Ways and Means Committee Chairman Dave Camp’s 2014 tax reform proposal that purported to make the tax code simpler and lower the top marginal corporate tax rate to 25%.

The ACRA groups’ goal was to show lawmakers the benefits of LKE as an engine for business investment. As the car rental industry buys 1.2 million cars a year and uses LKE for many of these transactions, it’s an important tool for the industry.

If LKE is eliminated, some estimates put the static savings at $48 billion. But the dynamic negative impact on gross domestic product (GDP) could be as much as 4% — because it would restrain a company’s cash flow and its ability to reinvest in the business.

Making a Difference

This year’s meetings saw attendance more than triple from the previous year of 10 participants, up from four in the first. “We’re grateful that car rental operators are seeing the importance of getting involved,” said Faulkner.

The meetings impacted legislators, but they also made a difference with attendees.

Gary Macdonald, president of Midway Auto Group in Los Angeles, remarked on the energy created by being in the nation’s government buildings and interacting with legislative staffs. “I was impressed by the high level of competence of the staffers we encountered, and how organized the process is — as compared to the general assessment that our government is a mess,” he said.

“People we met last year remembered us, and taking the time to meet with them in person on a regular basis speaks volumes about how serious we are in having an active role in government,” said Sharky Laguana, owner of van rental company Bandago. “This is an investment that will pay huge dividends across all tiers — both majors and independents — in our industry. It’s also just plain fun and fascinating to do!”

“As a small independent operator, I felt that our voice and concerns were heard by both ACRA and, subsequently, by the staffs of the legislators we met during our few days in Washington D.C.,” said Nima Mobasser, vice president of Los Angeles-based State Van Rental. “Realizing that the various government representatives genuinely care about our industry and our needs, regardless of the company size, was both surprising and encouraging.”