taxing Zipcars

There's the economics of Zipcars-- and then there's part of the politics of Zipcars, including taxes.

Interesting questions here-- taxation in general, taxation with respect to externalities, differential taxation, and so on.

Here's Sarah Nassauer in the WSJ...

In cities around the country, fans of Zipcar Inc. and other car-sharing companies are seeing prices rise for those jaunts to the grocery store. For that, they can blame the taxman.

As car-sharing companies have enjoyed skyrocketing growth in recent years, several state and city governments have ruled that car-sharing companies need to charge their members car-rental tax....

Rental-car taxes are already paid by the big players like Enterprise Rent-A-Car and Hertz. But since customers often use car-sharing services for just a few hours, those extra charges can end up making members' bills a lot higher....The issue is creating a lobbying headache for the small, up-and-coming car-share industry and putting it at loggerheads with traditional car-rental companies.

The concept of car sharing started in the U.S. as small, local, mostly non-profit ventures with explicitly green ambitions, but as national for-profit players Flexcar and Zipcar started to grow, city and state governments started to take note. Then Cambridge, Mass.-based Zipcar bought Flexcar last October, making it the largest and only national game in town, raising the question -- is "car sharing" the same as "car rental" and should services' members be paying rental-car tax?...

Car-sharing companies argue that they shouldn't be required to pay rental-car taxes because their concept -- members renting cars for short periods of time from parking spots close to their home -- reduces the number of cars on the road, eases parking and traffic problems and gets people to drive fewer miles. Some independent research backs up their claims....

Rental-car taxes are particularly popular among politicians because they believe the levies tend to target visitors, not voters....

Car-sharing companies' biggest adversary in the tax battle is often the legacy car-rental companies, which vehemently object to exemptions for car-sharing members, but not their customers....

Traditional rental-car companies point out that they now offer hourly rates, too, that appeal to local users -- and deliver the same environmental benefits as their car-sharing competitors....