House approves bill allowing peer-to-peer vehicle rentals with no sales taxes

PHOENIX — State lawmakers voted Thursday to let individuals rent their own vehicles to others with minimal regulations and no requirement to pay the same taxes as firms like Hertz, Avis and Enterprise.

The preliminary approval of HB 2559 by the House came over the objections of several lawmakers from both parties who questioned why the state should allow these “peer-to-peer” car rentals to escape the costs faced by their competitors. That covers not just state sales taxes but special levies in the state’s two largest counties where rental car fees pay for sports facilities and tourism promotion.

But Rep. Joanne Osborne, R-Goodyear, pointed out to foes that people are using online platforms like Turo right now to rent out their vehicles, with absolutely no state supervision. And she reminded foes that if they kill this legislation there will be no regulation at all.

That, however, is not the concern of those who voted against the legislation. They want a more comprehensive oversight scheme. They want those who are making money by renting out their own vehicles to pay what they see as their fair share of taxes.

“The voters of Arizona chose that they wanted to get revenue for everything that we have going on in this state from the tourists,” said Rep. Mitzi Epstein, D-Tempe. “And the way they wanted to do this was by this fee on rental cars. ”

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Rep. Jay Lawrence, R-Fountain Hills, said he believes online companies like Turo, which connects car owners with potential renters, are really car rental companies. And that, he said, means they should pay the same taxes and fees as others in that business.

HB 2559, sponsored by Rep. Travis Grantham, R-Gilbert, would impose some basic requirements dealing with keeping records, insurance and ensuring that there are no safety recalls. He also agreed to let cities and towns levy their own sales taxes on the transactions.

But Grantham’s legislation does not permit state sales taxes to be charged. And it exempts both the company that links up owners and renters, as well as the owners themselves, from charging the fees levied on car rentals in Maricopa and Pima counties.

That is a key difference between this measure and SB 1305 sponsored by Sen. David Livingston, R-Peoria, which awaits action by the Senate.