Do you remember the first time you had a ride by an Uber or Lyft driver? Did the idea of riding in someone else’s car — someone you didn’t even know — perhaps push you out of your comfort zone a little? You were picked up within minutes of clicking the app, arrived where you needed to go and your credit card was charged for exactly the amount you were quoted beforehand.
It was so easy that you almost wondered why you hadn’t done it before. Most everyone was happy, of course, except for the entrenched taxi industry that had grown unresponsive to changing market demands.
Just as Uber and Lyft helped usher in a new chapter of the “sharing economy,” Utah has recently seen the arrival of companies redefining the car rental market. Thousands of people in Utah are sharing cars through new companies called Turo and HyreCar. Think Airbnb, except instead of sharing a room in your basement, you’re sharing your car.
Turo and HyreCar help you share your vehicle when it’s not being used and help you find vehicles available for use in your area when traveling. Most major cities in the state have multiple cars available on these platforms, offered by Utahns who live there.
Yes, it’s legal — and the companies work out the insurance issues (including a $1 million policy on every car and driver using Turo). But pending legislation in the Utah Legislature, House Bill 429, could make it difficult for companies like Turo and HyreCar to compete with existing car rentals companies — who, like the old taxi industry, are not too excited about this new sharing economy competition.
Rightly so — because this new approach reduces overhead, capital costs and other bloat. Rentals using Turo or HyreCar can end up costing around 30 percent less than a typical car rental company.
These companies are mimicking arguments used by taxis against Uber, and hotels against Airbnb — expressing concern over public safety and wanting to “level the playing field.”
But these arguments are often a mere mask for protectionism — an effort to regulate their competition out of existence. Yet thousands of cars being shared by Utahns on Turo and HyreCar were likely purchased here in Utah, with millions of dollars of sales taxes paid by those owners when they purchased them. A little-known loophole in Utah tax law exempts the old car rental companies from having to pay any sales tax whatsoever. So much for a level playing field.13 comments on this story
To date, that means that the old car rental companies have gotten out of paying tens of millions in sales taxes in Utah on cars that they use to make money. Perhaps if car rental companies were consistent, they would encourage the Legislature to look at “leveling the playing field” by eliminating this loophole and earmarking this money to increase teacher salaries in the state.
The sharing economy empowers micro-entrepreneurs, enables people to lift themselves out of poverty and helps Utahns transact directly and happily with one another. Regulating these new models into oblivion is a net negative for our society, even if it helps the existing, entrenched industry.
The Utah Legislature should resist the temptation to impose additional burdensome regulations on a brand new industry, letting the free market system work its magic.