LIHU‘E — Major rental-car companies are opposing a bill before the Kaua‘i County Council that seeks to create and define a real-property-tax class for rental-car fleets.
The bill was introduced in July as a means of taxing the tourism industry for its impacts on county infrastructure.
“We believe the measure unfairly assumes that the rental-car industry disproportionately impacts county infrastructure and roads,” Mark Cochrane, controller for Enterprise Holdings in Hawai‘i, said on Wednesday at a council public hearing on the bill.
Bill No. 2828, introduced by Councilmember Luke Evslin by request of the administration, would quantify a car-rental fleet as more than 10 cars. Currently, rental-car companies are taxed in the industrial class, which runs $8.10 per $1,000 net assessed valuation. In the current form of the bill, there is no set rate for the proposed tax class.
Cochrane estimated that rental cars only make up about 8.5% of cars on Kaua‘i.
“Therefore, we are talking about a smaller amount of total vehicles,” Cochrane said. “In addition, the type of vehicles that we are renting are passenger vehicles. We do not rent any heavyweight, commercial-sized vehicles, so the use does not cause the same amount of damage as a larger vehicle could.”
Cochrane on behalf of clients Enterprise Holdings, Alamo Rent-A-Car, National Car Rental and Enterprise Commute, in written testimony also pointed to the unfair nature of this bill not similarly taxing moving companies, tour operators, car dealerships, mail carriers and other services that also are in the business of moving goods or people with cars.
“Why is the rental-car industry being singled out when there are many other businesses that facilitate vehicular usage on the island, such as delivery services, that do not remain within the confines of the parcel taxed?” Robert Muhs of Avis Budget Group wrote, echoing that point. “This is an equal-protection issue.”
The rental-car industry already pays into the state general excise tax, a $5 per day rent tax, a 10% airport concession fee and a $4.50 per day consolidation facility charge.
The county’s real-property tax is based on use, which provides the county the ability to tax different uses separately based on the underlying assessed value of the property. Real-property-tax classification runs with the use on the land, similarly to how the county taxes short-term vacation rentals separately from the property of a residential home.
“The pandemic has presented unprecedented challenges, and our industry is still recovering,” Muhs said. “Bill 2828 will create an undue burden not only on visitors, but on Hawai‘i residents that need to rent cars.”
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Sabrina Bodon, editor, can be reached at 245-0441 or sbodon@thegardenisland.com.
