LIHU‘E — After strong opposition from major rental car companies, the county administration has asked for a deferral of a bill that would create a real property tax classification for rental car operations.
The deferral, requested and granted during Wednesday’s Finance and Economic Development Committee of the Kaua‘i County Council, came after questions of the legalities of singling out rental car companies. Bill No. 2828 was introduced in July by Councilmember Luke Evslin at the request of the administration.
“We’re looking at this bill, and we’re trying to do the right thing by everybody,” county Finance Director Reiko Matsuyama said yesterday. “We still believe in the policy that this bill will do and we believe these rental cars need to be separate from the industrial class, but we want to be sure that we capture the intent while trying to legally do the right thing as it relates to the definition of commercial vehicle rental usage.”
Tiffany Yajima representing Enterprise Holdings, which includes Enterprise Rent-A-Car, Alamo, voiced concern with the county imposing a tax on personal property.
“We are concerned that this bill exceeds the county’s taxing authority by attempting to tax personal property and motor vehicles under the guise of a tax on real property,” Yajima said in written testimony.
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 of the land, similarly to how the county taxes short-term vacation rentals separately from the property of a residential home.
At this time, 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. The bill also quantifies a car-rental fleet as more than 10 cars.
Councilmember Felicia Cowden presented real property tax information from 12 rental car companies on island, showing that from these companies, the county collects around $162,133 in taxes. The hand-out listed all of the Enterprises’ operations on Kaua‘i, as well as Avis, Budget and Thrifty.
Part of the reasoning of this bill is to limit the “over-abundance of vehicular car usage” on Kaua‘i.
“Beyond ·the impact to road infrastructure, increased car usage has oversubscribed the capacity of highways leading to delays and loss of time, caused over usage of public parking areas, facilitated the oversubscription of public recreation places, and increased the frequency of emergency response calls,” the bill reads.
The measure would only be applied to rental car companies primarily in the of business renting out cars for people to move around in. The bill would not be applied to places like U-Haul or Home Depot which offers rentals for hauling items or companies that provide delivery services.
“It’s unfair to disproportionately single out the rental car business,” Lori Lum, representing Avis Budget Group, said.
Yajima and Lum both argued that state and federal protection laws would be violated with the passage of the bill, which county Managing Director Michael Dahilig disagreed.
“We obviously do not believe that rental car companies fall into a protected class,” Dahilig said.
Dahilig explained that while there is “similar usage” in the movement of goods and commodities, “We believe it’s not appropriate to characterize those as the same class.”
Council Vice Chair Mason Chock requested that when the bill comes back up, both legal and implementation questions will be answered.
“My hope, again, is that we can consider the bigger picture and proposed impact in a way that this body can stand behind and feel confident in the direction that we might fall upon in the future,” Chock said.
