Illinois Gov. Bruce Rauner vetoed a bill that would have required peer-to-peer car sharing companies to be treated like traditional car rental companies, including paying car rental taxes.
Rauner’s rejection of the measure is a boost for car-sharing companies like Turo and Maven that allow car owners to “rent” their car out to other people through their apps, though he returned the measure to lawmakers with suggestions for changes that would protect the companies from the regulations and taxes in the measure as passed. The Legislature could override his veto, though.
Maven recently expanded its car-sharing platform to allow car owners to rent out certain newer car models. The service is being offered on a trial basis in Chicago, Detroit and Ann Arbor by Maven, which was started by General Motors.
Turo operates in several cities around the country and was one of the early companies to offer the service.
Car-sharing companies have been met with push back from traditional car rental companies and local officials. Turo, for example, sued the city of Los Angeles because the airport there considers the company a car rental firm. Turo and San Francisco International Airport are also embroiled in litigation.
The companies say they shouldn’t be included in laws covering rental car companies because they’re fundamentally different businesses
“Turo is not a rental car company; we do not own a fleet of cars,” Turo Vice President Michelle Peacock said in a posting on the company website after Turo was sued by San Francisco International. “Everyday car owners like you and me list their privately owned cars on Turo to offset the costs of car ownership, and those in need of a car use Turo to find a car and book directly from the owners.”
Rauner supports the car-sharing idea, calling it innovative in his veto message.
“Illinoisans can expect to see this expansion result in lower prices and more choice,” Rauner wrote. “There are meaningful and direct benefits to car sharing that Illinoisans will enjoy at every level; it will reduce congestion, lower the strain placed on scarce parking space inventory, and it will make it easier for people to afford vehicles while simultaneously lowering the cost of transportation for those who cannot afford full-time car ownership.
“Oversight of this new industry is important to protect consumers; however, we should be careful not to unintentionally smother its growth before it has a chance to get off the ground,” Rauner wrote. His recommended fix to the bill doesn’t include the rental car tax that the passed legislation would have required. Illinois has a five percent car rental tax, plus heavy local add-on taxes in some cities, including Chicago.
Enterprise Rent-A-Car, which contends car-sharing companies are essentially rental car providers and supports regulations of the new competitors, told the publication Ars Technica that Rauner’s veto was “beyond comprehension.
“Ensuring vehicle safety, offering transparent pricing, and collecting essential state and municipal fees is just common sense,” Enterprise said in the statement it gave to the publication. “If peer-to-peer doesn’t pay taxes or fees, cities/municipalities will have to find ways to make up for lost revenue. That will only hurt local businesses and citizens while peer-to-peer companies get a free pass. We are confident the Legislature will right this wrong.”