Renting out your car? There soon might be a tax on that
Whether it's the Rolls-Royce at $999 a day or a Ford Fusion for $20, you can find a sweet ride to rent on Turo.
The peer-to-peer car-sharing platform lets individuals like Andrey Avakov of Buffalo Grove rent out their private vehicles and gain extra cash, in his case to help pay off the lease on his 2016 Toyota Camry.
Sound like a win-win? Enter Senate Bill 2641, a policy that regulates personal vehicle renters and requires them to pay similar taxes as companies like Enterprise and Budget.
The legislation passed the Illinois House and Senate last week and awaits Gov. Bruce Rauner's signature.
Supporters say the policy provides consumer protection and that people who use platforms like Turo and Getaround shouldn't get a free ride on taxes.
“We believe any entity ... that rents a vehicle to an individual for profit ought to play by the same set of rules,” the American Car Rental Association's government relations representative Gregory Scott said.
Hosts are covered by a $1 million liability insurance policy provided by Liberty Mutual. Renters also are offered coverage with Liberty Mutual, and if they decline are still provided with the state-mandated minimum level of insurance, a spokeswoman said.
The legislation was “pushed through at the last minute,” with an assist from giant corporations like Enterprise, said Michelle Peacock, Turo's VP and head of government relations. “It's about creating a way to put Turo out of business in the state of Illinois,” she contended Friday.
San Francisco-based Turo started up in 2010 and has 6,600 hosts in Illinois and about 230,000 people registered as renters.
“Check their license, walk around the car, check the fuel and mileage, and send them off on their adventure,” its website states.
Avakov began using Turo a year ago when he was stuck with a lease on the Camry he acquired through a previous job.
The Rolling Meadows business account manager already has two other vehicles that are paid off and needed some extra cash.
“Turo is a really neat platform,” he said, in that it lets him choose his level of insurance and what customers he is willing to share his car with.
Typical renters range from college students who need wheels to vacationing families, like “a couple in their late 40s with two kids” who were traveling to Michigan.
Avakov asks his guests to return the car in the same condition it was at pickup and has no complaints about the experience. One man who drove with dirty boots even left him an extra $30 for cleaning.
But, “it's not making me a millionaire,” he said, estimating he earns between $90 and $250 a month.
Avakov said Turo users already pay taxes when buying or leasing cars.
“We are the little guys and multibillion-dollar companies want to squeeze us.”
Scott thinks the “David and Goliath” comparisons are incorrect in that his association represents “mom and pop” companies with just five vehicles in their fleet as well as major corporations.
And, Republican state Rep. Grant Wehrli of Naperville, a chief co-sponsor of the bill, said lawmakers are more concerned about liability than taxes. If a renter doesn't have a valid license and there's an accident, what are the repercussions? he asked.
“We're taking something that's loosey-goosey and trying to put a framework around it.”
Turo representatives counter that Goliaths like Enterprise have clout in Springfield and helped design policy that “doesn't make sense for a marketplace like Turo.
We're an internet platform that connects people like eBay or Uber ... we don't own a fleet of cars,” Peacock said.
Enterprise Holdings Inc. has contributed at least $490,500 to lawmakers, according to state records. The rental company did not return requests for comment.
Wehrli, who has not received any donations from Enterprise, said the legislation “is truly about consumer protection. It's not about overreach. We're not putting onerous restrictions to hamper this type of activity from prospering.”
Illinois currently has a statewide 5 percent automobile renting tax, and municipalities and counties may levy additional taxes.
Transportation expert Joseph Schwieterman is concerned that if successful, the policy would exact taxes of up to 20 percent.
Car-sharers are typically people who need a vehicle for a short trip or errand, the DePaul University professor said.
“These taxes can become a real barrier” for someone who chooses not to have a car or can't afford one, Schwieterman noted.
Got an opinion on car-sharing? Drop us an email at mpyke@dailyherald.com.
Gridlock alert
• Sorry Woodstock, the bridge carrying South Street over Route 14 will be closed for repairs by the Illinois Department of Transportation through most of the summer. Detours will be posted.
• And in Lake County, the Bradley Road Bridge over the north Tri-State Tollway will be closed through September for reconstruction.
Expert advice
Is your child's safety seat a perfect fit? An expert will check and help reinstall if needed at upcoming safety fairs from 10 a.m. to 2 p.m. July 14, at the Lake Forest Oasis on the Tri-State Tollway, and July 28, at the Buy Buy Baby store, 301 N. Randall Road, Batavia. Events are hosted by the Illinois State Police and Illinois tollway. For more information, go to illinoistollway.com/about/state-police#Kids.