Senate overrides Rauner veto on bill proposing new car-sharing taxes, regulations
Senate lawmakers overrode Gov. Rauner’s veto of a lobbyist-backed bill aiming to sideswipe car-sharing startups with new taxes and regulations. The bill returns to the House.
Car rental companies are looking to drive out competition – with Springfield lawmakers behind the wheel.
State senators voted Nov. 14 to override Gov. Bruce Rauner’s veto of a bill that would impose new taxes and regulations on peer-to-peer car-sharing services. The services, such as Turo and Getaround, allow users to rent out their personal vehicles.
Senate Bill 2641 cleared the Senate by a margin of 39-12, with three lawmakers voting “present.” The bill will now return to the Illinois House of Representatives, where a successful veto override will make SB 2641 state law.
The bill would reclassify car-sharing companies as traditional car rental services, subjecting them to the same taxes and regulations as traditional companies, but denying them a significant tax break enjoyed by incumbents. Car rental companies would gain an unfair advantage.
Traditional car rental companies are exempt from sales taxes on vehicles they purchase, saving those companies $200 million annually, according to the Illinois News Network. Car-sharers cannot claim that sales tax exemption. Also, car-sharers’ earnings are subject to the state income tax. Those taxes, in addition to the rental tax included in SB 2641, would “triple tax” the startups’ service, Turo Vice President Michelle Peacock said.
Lawmakers had originally drafted SB 2641 as a bill focused on liability laws in the car rental industry.
But several additional amendments gave the bill a protectionist overhaul, bringing in provisions aimed at hobbling innovative competitors. Rauner issued an amendatory veto of the bill in August, stating that it would impede progress and innovation. The outgoing governor criticized the lack of transparency with which lawmakers advanced the bill, and in his veto message proposed new regulations more specific to car-sharing services.
SB 2641 enjoyed strong backing from traditional car rental services, such as Hertz and Enterprise Holdings. And at least one lawmaker who voted in support of the bill has since established a professional relationship with Enterprise.
Since resigning from her seat in the General Assembly in September, former state Sen. Pam Althoff, R-McHenry, has registered as a state lobbyist. Among her clients? Enterprise. While serving as a state lawmaker, Althoff received $6,100 in campaign contributions from Enterprise’s political action committee, according to records filed with the Illinois State Board of Elections.
Althoff told the Chicago Sun-Times, “I don’t think [it’s], quite frankly, unusual.”
Enterprise contributed $10,000 to the Illinois Democratic Party in 2017, according to the Sun-Times, and donated an additional $10,000 on Oct. 31.
Illinois has a concerning history of responding to new, innovative companies – including Uber, Lyft and Airbnb – with high taxes and needlessly prohibitive regulation. With a state economy already hindered by a lousy business climate, House lawmakers would be wise to welcome new business startups and reject measures such as SB 2641 that protect established companies at consumers’ expense.