The legislation would offset car rental companies’ increase to state corporate income as a result of tax reform legislation of 2017, which prevented corporations’ ability to defer taxes for like-kind exchanges.
Car rental companies challenged the tax, arguing that it violated a part of the Arizona state constitution that requires tax revenue from rental vehicles to go toward public highways.
House Bill 102, dubbed the "Vehicle Rental Modernization Act," would generate additional revenue for the state's general fund.
The coalition includes American Car Rental Association members like Enterprise and Hertz, as well as cities, airports, the Arizona Lodging and Tourism Association, and the Cactus League.
The state is expected to generate about $2.8 million a year from the tax.
The fee will fund renovations to Upstate New York transit. However, the legislation does not address last year's FAA reauthorization, which includes an amendment that ensures taxes imposed at airports be levied only for airport purposes.
The tax will add 0.5% on the current 9% sales tax on car rentals.
While the bill did not get the endorsement of the state's transportation board, Uber backed the legislation, as the company says its services are complementary to public transportation.
Similarly, Salt Lake City is expected to pass an ordinance today that will levy fines between $500 and $1,000 on peer-to-peer carsharing companies that operate at Salt Lake City International Airport without authorization.
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