Packard seeks to close rental tax loophole
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Apr. 19—CONCORD — Executives with companies renting cars and offering travel agency services online protested Monday about an effort to levy the state's main hospitality tax on their sales.
House Speaker Sherman Packard, R-Londonderry, said for three years he's been trying to convince the Legislature to close what he views as a loophole that lets some avoid paying the 9% tax on restaurant meals, hotel room and car rentals.
For 15 years, companies like Avis, Hertz and Enterprise have tacked on the state tax to all their car rental contracts.
But companies engaged in this online car rental sharing business do not pay the tax.
These companies don't own cars, but arrange for temporary rentals of vehicles owned by private individuals who are trying to make some extra money.
"Our belief is all they do is rent cars; the same rules should apply to them as the brick-and-mortar stores," Packard told the Senate Ways and Means Committee.
"As long as we have the tax on car rentals, it should apply fairly across the board."
The bill (HB 15) would in the future make these "facilitator" companies pay the tax, not the individuals who own the cars getting rented.
John Olsen, Northeast Region director of the Internet Association, said these small companies with an online platform should not be treated the same as these mega-car rental behemoths.
"This should be considered a new tax," Olsen said. "This peer-to-peer platform, these cars are personal vehicles. There are no fleets or other advantages that traditional rental companies now enjoy."
Bill to correct constitutional flaw
State Rep. Susan Almy, D-Lebanon, said it's not a new tax, and New Hampshire must apply it this way because the Constitution requires that similar businesses get taxed equally.
"We really need to get this corrected," Almy said.
Maura Weston, a lobbyist for San Francisco-based Turo, one of the country's most successful car-sharing maketplaces, said the average car owner makes $300 a month renting out a vehicle.
The same tax in Packard's bill would also apply to online travel agency services. The language exempts an agent's commission from the tax, but it would be levied on any "administrative fee" the agent charges for travel search services.
Genevieve Strand, director of advocacy for the American Society of Travel Advisors, said travel agents last year took an average 82% loss of income when air travel came to a virtual halt at the outset of the pandemic in America.
"Please oppose these new taxes at a time when the travel service industry has been brought to its knees by COVID-19," Strand said.
Steve DelBianco, president of Netchoice, said when the Supreme Court, in its June 2018 Wayfair decision required no-sales tax states like New Hampshire to collect the levy on some purchases, lawmakers here pushed back with protective legislation.
"Now you are taking the exact opposite policy with this bill," DelBianco said. "This tries to tax a travel service outside of New Hampshire to customers who aren't even in New Hampshire."
DelBianco added the state won't be able to enforce the tax on these out-of-state sales.
"You will realize the juice is not worth the squeeze," he added.
