Zipcar tax exemption gets zapped in Legislature

Users of Zipcar, formerly called Flexcar, will continue to pay a car-rental tax after the state Legislature failed to give the company an exemption.

Users of the car-sharing company now pay a 9.7 percent tax, adding about $1 to the $10-per-hour rental fee.

The tax was announced in September by the state Revenue Department, which said car-sharing organizations, such as Zipcar, are providing rental cars and are required to collect the car-rental tax. The tax went into effect Nov. 1.

Gov. Christine Gregoire sent a letter to the department, suggesting that Flexcar should not be taxed. "I believe our tax code should act as an incentive, not a hindrance, to innovation," she wrote.

The tax was deferred for a time, but the Revenue Department determined that the company must pay.

The company vowed to push for legislation that would exempt the company from the tax. While a bill was introduced this legislative session, it didn't pass.

"It's clear that car-sharing members will not receive relief from Washington state's rental-car tax," Zipcar spokesman John Williams said Thursday. "We are disappointed in the outcome. Zipcar is committed to continuing to find ways to exempt its members from a tax it believes is wrongfully applied."

Williams said Zipcar will try next year to win the exemption. The company asserts the tax is unfair because it targets local residents who already pay taxes, and it punishes a company trying to get cars off the road and people into mass transit.

Susan Gilmore: 206-464-2054 or sgilmore@seattletimes.com