As the number of Minnesotans who do not own vehicles – either for financial reasons or by choice – increases, the popularity of car-sharing services providing short-term car rental options increases. Some lawmakers believe Minnesota’s laws have not kept pace with the growing demand for such services. A bill heard in the Senate Tax Committee this week would exempt these transit alternatives from the higher tax rates charged on more traditional vehicle rentals that are more typically used by out-of-state visitors.
In Minnesota, most short-term vehicle rentals are subject to the state’s general sales tax, a 9.2% rental tax and a 5% fee, in addition to any local sales taxes in effect within the area the car is rented. From 2013 until December 2016, there were about 600 cars available for sharing in the Twin Cities metropolitan area, but that number is down to about 175 since one major company left the market last year, citing these high fees. The proposal heard this week would exempt such vehicles from the 9.2% rental tax and 5% fee in an effort to support existing companies and attract new ones that can provide Minnesotans with other economical, environmentally friendly transportation alternatives. The bill was passed to the Transportation Committee. (SF 133)